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U.S. Lodging Industry Continues Record Growth

Elaine Sahlins • 10/15/2018
Driven by abundant capital, low interest rates and the somewhat surprising absorption of new supply in many markets, the nation’s hotel industry continues to set revenue records in 2018.

U.S. Lodging Industry

Our recent U.S. Lodging Industry Overview notes that as of mid-year, lodging revenue was in its 100th month of expansion. Relied upon by industry, insiders, media and trades, the report takes a look into the U.S. lodging industry’s operating performance and trends.

Many of the Top 25 hotel markets in the U.S. are steadily absorbing growing additions of new supply. The pipeline of new hotel rooms is being driven by a desire for upscale and upper-midscale rooms, which represent 71% of all new hotel rooms under construction. A few highlights of the marketplace: New York, as one of the most desirable hotel markets in the world, has 12,800 rooms under construction, while heavy convention and leisure player, Orlando, has a pipeline of 6,900 rooms under construction. Somewhat surprising is Nashville’s surge of 5,300 rooms under construction.

Despite a hedge of uncertainty about this year performance and the impacts of a number of storm impacted markets, there is reason to believe the optimism will continue for the remainder of 2018. As of mid-year, the third-quarter bookings at North American hotels were stronger than last year for both the group and business transient travel segments.

Another indicator of health: Hotels continue to be considered by developers as stand along projects and as key components of large mixed-use projects – complementing retail, office, and residential uses.

Overall, the economy is giving people the confidence to travel. Travel is a discretionary activity and usually a short-term decision. It’s easy to make travel choices when times are good. It shows that even with all of the technology that facilitates communication, it is still important to have in-person interactions for business and leisure.

All of this generally positive news is not to say there isn’t some overall anxiety. Optimism about tax reform and national GDP growth is balanced by concerns about immigration policy, the challenges in finding and retaining employees, international inbound travel, and tariff wars.

Overall, however, the steady positive trends in the first half of 2018 are providing confidence for owners, operators, and lenders and continue to support transactions.

For more insights, trends and analysis, visit http://www.cushwakehospitality.com/

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