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12/04/2019

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

    About the Author

    Ahmed Kabani is the First Vice President Investments – Senior Director and a member of the National Hospitality Group in the Marcus & Millichap Miami Office. In his 11 years working in the industry, he has commanded relationships with an investment pool of over 1,000 of the Nation's most prestigious and active hotel owners, investors, REIT's and Private Equity groups. From 2010 until today he is among the top 10 producers nationwide for the Marcus & Millichap National Hospitality Group. Kabani plays an active role in promoting and advising tourism and hotel development through arranging the Annual Hotel Investment Forum each October.