- Companies are seeking to expand operations this year, though finding qualified workers remains a challenge. Employers will enhance compensation packages to attract top talent, boosting wage growth, which should coincide with more leisure travel.
- Economic growth will be sustained throughout 2019, although momentum is expected to moderate as several factors could begin to weigh on expansion. These include the longer-term implications of the government shutdown, weakening international economies, and trade tensions.
- Positive economic forces, including job creation, consumer confidence and rising retail consumption, will outweigh other factors mitigating growth, preserving steady momentum.
National Hotel Overview
- Another year of steady job creation and rising wages will support consumer spending at hotels this year. The improving economy is boosting travel plans, which underpins room demand. At the same time, the supply of hotels is beginning to moderate.
- Hotels are increasingly adapting to traveler preferences as they continue to focus on experience-oriented stay that many visitors seek, including those taking solo trips. To cater to these solo travelers, hotels are hosting social events, providing tours and creating communal spaces.
- As knowledge of home-sharing services continues to grow, more local governments are trying to put regulations of these short-term rentals into place. The new legislation may sway some home owners to no longer list their homes, limiting inventory and helping drive demand for hotels.
- The Federal Reserve will likely focus on the intersection of a global growth slowdown and continued labor market strength as they form their plans.
- As millennials constitute a greater share of overall travel spending, hotel investors continue to target markets where visitor counts are highest.
- Industry sentiment remains broadly upbeat, producing an active marketplace with plenty of sources of liquidity available. Local, regional and national banks and insurance companies have been active, as well as more nuanced financing structures.
Hotel Investment Outlook
- Improving property fundamentals and elevated pricing have reaped gains for investors over the course of the recovery and this trend should continue through year end as the economy grows.
- Clarity surrounding the new tax laws will also spur investment activity, as many buyers look for opportunities under the new regulations. The new depreciation laws, in particular, may prompt some additional interest in smaller hotels with add-on potential.
- Rising tourism and healthy occupancy and RevPAR growth in many of the nation’s smaller markets are capturing increased investor attention, as many of these metros generate higher yields than found in gateway cities.