December 21, 2012
PKF: U.S. hotel market set to prosper through 2016
Another positive outlook for the hotel can this week when PKF Hospitality Research stated the U.S. lodging industry will see perpetual gains in demand, occupancy, ADR and RevPAR through 2016.
RevPAR for U.S. hotels is projected to grow at a compound annual average rate of 7.2% for the next four years … more than double the historical long-run average.
The report cautions, however, that the U.S. federal government’s ongoing “fiscal cliff” budget standoff is clouding what would otherwise be a sunny outlook for 2013.
Without falling off the fiscal cliff, the PKF believes RevPAR will increase by 6.0% in 2013. However, if budget negotiations fail, it can be assumed that RevPAR growth will be well below that. Under almost every economic scenario, 2014 is shaping up to be a year of strong gains in both occupancy and ADR.
By year-end 2013, PKF-HR is forecasting the national occupancy rate to be 62.1%. While this is below the pre-recession peak of 63.1%, it does surpass the long-run average occupancy level of 61.9% per STR.
Much of the gains in ADR will be experienced by properties in the luxury, upper-upscale and upscale chain segments. Occupancy levels for these properties are projected to remain above 70% through 2016.
Roughly 85% of future RevPAR growth will be driven by increases in ADR.
PKF-HR is forecasting net operating income to grow at a compound annual rate of 10.0% through 2016.
Expectations High for Existing-Home Sales and Pricing
In addition, the median price of an existing-single family home rose to $180,600 in November, up 10.1 percent from November 2011.
In a related report from J.P. Morgan Chase & Co., the firm expects U.S. home prices to rise 3.4% in its base-case estimate and up to 9.7% in its most bullish scenario of economic growth.
Standard & Poor’s said it expects a 5% rise in 2013.
According to a monthly economic outlook released by Fannie Mae’s Economic & Strategic Research Group, despite lower expectations for the economy’s progress as a whole this quarter, home sale and price trends suggest housing finally represents “a tailwind to growth,”
Home prices have seen strengthening year-over-year gains over the last several months and prices are expected to end the year on a positive note for the first time in six years according to Fannie Mae economists.
They projected the median price of an existing home would rise 4.2 percent on an annual basis in 2012, to $173,000. They expected the median price of a new home to increase 4 percent, to $236,000. Fannie Mae is projecting that median prices of both new and existing homes will rise an additional 1.7 percent in 2013.
Existing-home sales, new-home sales and single-family housing starts are expected to see substantial increases from last year. Fannie Mae predicts each will rise 9.6 percent, 19.5 percent and 25.7 percent, respectively, in 2012 compared to 2011. They expect further improvement next year with increases of 6.4 percent, 21.9 percent and 22.4 percent, respectively.
Posted by Scott R. Lodde
December 13, 2012
STR Year-End 2012 Forecast for US Hotels
Smith Travel Research (STR) released its preliminary year-end data. STR projects that the U.S. hotel industry will finish 2012 by posting strong performances in all major metrics.
Based on STR data through November, preliminary 2012 year-end results for the U.S. hotel industry include:
- · Increases in supply (0.5 percent) and demand (2.8 percent);
- · a 2.3-percent increase in occupancy to 61.3 percent;
- · a 4.3-percent rise in average daily rate to US$106.17; and
- · a 6.6-percent jump in revenue per available room to $65.08.
Record demand along with limited supply growth, has fueled the increases in the other measurement categories.
STR’s latest forecast was issued at its Hotel Data Conference in September and included a 0.5-percent increase in supply, a 2.6-percent increase in demand, a 2.1-percent increase in occupancy, a 4.4-percent increase in ADR and a 6.5-percent increase in RevPAR.
Homes Fuel Economy
Once considered a drag on growth, real estate has reversed course and is now a key economic driver at a time when other sectors are slowing.
Macroeconomic Advisers projects the economy will grow at a 1.4% annual rate in the fourth quarter, with housing contributing 0.4 percentage point. IHS Global Insight is projecting a 1% growth rate, with housing contributing 0.53 of a percentage point—the largest contribution since 2005.
Home prices rose 3.6% in September from a year ago, according to a recent S&P/Case-Shiller National Index. Prices are up 7% through the first nine months of 2012, which is the strongest rise since 2005 and puts prices on a trajectory to beat even the most optimistic forecasts from earlier this year. The gains also are broad-based, with the 20 cities tracked by the Case-Shiller index—except Chicago and New York—showing year-over-year gains.
While rising prices now are driving the housing market forward, that couldn’t have happened without a painful cycle of losses. Lower prices and rock-bottom interest rates have boosted affordability. The average monthly mortgage payment on a median-price home in October, assuming a 10% down payment, fell to $720 at prevailing rates, down from nearly $1,270 at the end of 2005.
Highlights from the NAR 2012 Profile of Home Buyers and Sellers
The annual survey conducted by the NATIONAL ASSOCIATION OF REALTORS® of recent home buyers and sellers provides insight into detailed information about their experiences
Here you can find highlights from the latest report.
- 39 percent of recent home buyers were first-time buyers, a slight rise from 2011, but closer to the historical norm of 40 percent.
- 65 percent of recent home buyers were married couples—the highest share since 2001. Conversely there was the lowest share of single buyers since 2001.
- For 52 percent of home buyers, the first step in the home-buying process was taken online.
- The typical home buyer searched for 12 weeks and viewed 10 homes—a decline from 12 homes in prior year, which speaks to the tightened inventory in many areas.
- 89 percent of buyers purchased their home through a real estate agent or broker, similar to last year’s report—a share that steadily increased from 69 percent in 2001.
- 88 percent of sellers were assisted by a real estate agent when selling their home.
- Only 9 percent of recent sellers sold via FSBO sale. Among FSBO sellers who did not know the buyer prior to the sale—20 percent sold via FSBO because the buyer directly contacted them.
- Approximately two-thirds of home sellers only contacted one agent before selecting the one to assist with their home sale.
Posted by Scott R. Lodde