Headlines – Week of December 16, 2012
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