Industry Forecasts on March 20, 2013 from the Hunter Hotel Investment Conference

I’ve been overwhelmed by the positive industry outlook from the experts at this year’s Hunter Conference.  Nearly everything I hear from the industry’s top analysts confirms what I’ve been telling investors and bankers for the past 18 months.

Jan Freitag, Senior VP of STR, said they’re seeing 5-7% RevPAR (Revenue Per Available Room) growth continuing for the next few years.  Two thirds of that growth is driven by ADR (rate) growth.  The last two hotel cycles lasted 65 and 112 months, so is that is an indication of the duration of this cycle, we still have a few years to go.  Regarding Chain Scales, the Upscale and Upper Midscale segments will experience about 1.5% supply growth and 4.5% demand growth; this dynamic will make these segments the fastest-growing in the U.S. in terms of RevPAR.

Tim Hart, EVP of TravelClick, said that their data show through early 2014 the U.S. hotel industry  will be about 2% ahead of 2012 occupancy.   Both business and leisure occupancy are trending up, at 2.8% and 2.4% respectively.  Rate growth has been consistent, led by the leisure segment, where increasingly fewer discounts are becoming available.

R. Mark Woodworth, President of PKF Hospitality, said that they’ve found the Index of Leading Economic Indicators correlates strongly with hotel demand.   Both are up right now.  He says that industry fundamentals are now more solid than they have been for the past 30 years.  Demand growth is running two times the long-run average, and it is driving RevPAR growth at 2.5 times the long-run average.

Woodworth summarized his forecast with, “The NOI forecast is for profit growth well above the long-run average, virtually as far out as we can see.  We have record demand levels across the industry.”  He tempered that sweeping observation by saying that some markets will see negative demand this year, either through the opening of a new, large competitor or because ADR has gotten out of line, driving guests to push back and either cancel trips or stay farther away.

I’ll have more from the conference later.  The best way to summarize what I’m hearing is that this is a GREAT time to develop hotels.


By Dave Hogg, reporting from the Marriott Marquis, Atlanta, GA

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