U.S. Hotel Value Growth through 2016

October 4, 2012

HVS – U.S. Hotel Value Growth through 2016

According to the HVS 2012 U.S. Hotel Valuation Index (HVI), U.S. hotel value growth will persist through 2016, surpassing a 2006 peak of US$100,000 per room in 2013.  

The HVI tracks hotel values in 66 individual U.S. markets and the United States as a whole, examining hotel supply, demand, occupancy and average rate trends.

Increases in occupancy, average rate and demand, along with limited supply growth are expected to yield relatively strong growth in net operating income, the report said. These dynamics, along with fewer buying opportunities, will lead to a positive per room value change in the United States in 2012.

The report notes that because of the strength of demand in the meeting and group segment, per room values for the top three U.S. convention cities; Las Vegas, New Orleans and Tampa are expected to increase most this year.

Some cities which saw a recovery earlier however, will see future values decline or slow.

Examples of limited upside growth include San Francisco and Boston, as their per room values recovered in 2010 and 2011.

RevPAR Forecasts up for Remainder of 2012

PKF Hospitality Research, PwC and STR all revised their 2012 RevPAR forecasts up for the remainder of the year compared to their mid-year forecasts.

PKF notes the main drivers continue to be favorable levels of real personal income growth.

Also noted to increase demand are travelers with increased incomes allocating more of their money to meetings and leisure travel, despite uncertainty that persists in the market.  The large degree of transient business and pent-up demand left over from the downturn is also a factor.

While RevPAR forecasts for 2012 won’t reach the 8.2-percent RevPAR growth the U.S. industry saw in 2011, the three companies are predicting increases between 6.5% – 7.2%.

Hotel demand in the last two years has been record-breaking.  Through July, the industry sold more rooms during that span than ever, almost 106,000,000.

However,  not all markets are currently benefiting from the rise in RevPAR over the past two years. The majority of gains are being found in the top 25 gateway cities and sparsely throughout secondary markets.

The experts expect more construction in 2013 as more firms get sites under control.  However, compared to historic norms construction is very low.

Posted by Scott R. Lodde


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