The Question at the Top of Every Hotel Investor’s Mind

Both Hotel ADR and RevPAR Growth Trends are starting to slow down, which could indicate a stabilization in the hotel economy.

With a strong decade of growth in the Hospitality Sector, coupled with recent trade wars and monetary policy changes, the question at the top of every hotel investor’s mind is whether we are approaching the next great recession.

John Chang, Senior Vice President of Marcus & Millichap Research, presented Hospitality industry data to illustrate this matter further, at the Marcus & Millichap Kabani Hotel Group 4th Annual Hotel Investment Forum hosted this October.

“Recessions are tough on the hotel business, and our industry growth cycle is at record duration,” according to Chang. Thus, hotel investor skepticism regarding the future of the hospitality economy comes to little surprise.

However, both Hotel ADR and RevPAR Growth Trends are starting to slow down, which could indicate a stabilization in the hotel economy. This notion aligns with a survey conducted by Marcus & Millichap Research Services, where it was concluded that hotel investors expect stabilized hotel property values soon.

With this being said, Chang suggests following reactions in confidence levels impacted by the recent yield curve “un-inversion” to assess risk to the hospitality sector. As we look toward the future, we must be ever perspicacious in preparing our investments and maintaining adequate reserves in the event of a recession.

Sources: Marcus & Millichap Research Services, BEA, BLS, U.S. Census Bureau, Federal Reserve, STR, Inc