STATE COLLEGE, Pennsylvania — Hotel values are set to increase through at least 2014, led by particularly strong gains in the economy segment, according to the latest Penn State Index of U.S. Hotel Values.
Hotel values are projected to increase 8.8% during 2013, equating to a per-key value of $106,957. During 2014, values are projected to increase 6.9% to a per-key value of $114,334, according to the index.
“Hotels continue to be a preferred investment during uncertain economic times. U.S. gross-domestic-product growth is expected to continue, but not at inspiring levels. Long-term interest rates are anticipated to remain fairly low. Unemployment is expected to continue to hover in the 7% range, keeping consumer spending relatively strong,” said John O’Neill, director of Penn State University’s School of Hospitality Management and creator of the index.
“Occupancy levels will be at or near their historical peak. Average daily rates are expected to register moderate gains. Construction activity is expected to remain moderate, or at least well below historical averages. Commercial and leisure transient hotel room demand is expected to stay pretty strong, whereas group demand is a bit dicey.
“Average U.S. hotels are expected to remain profitable in the near term,” he said.
NOTE: This article is largely reprinted from a recent article by Patrick Maycock, Editor-in-Chief, HotelNewsNow.com. I thought my readers would learn from it.