The Miller-Gomes Hotel Team at Marcus & Millichap with HVS presents the Outlook on the Texas Hospitality Industry
- Average RevPAR across the industry in the United States is down by about 84%
- Occupancy recovery took four years following 9/11 incident and about seven years post the 2008 Financial Crisis
- STR and HVS combined research data forecasts RevPAR recovery (back to pre-Covid-19 levels of 2019) to occur in approximately half a decade
- New Supply: Under construction projects may be delayed; new construction that haven’t broken ground may face financing challenges; some new projects may become infeasible due to prolonged recovery periods, high construction costs etc.
- Note: There are 215,000 new hotel rooms under construction/broken ground in the United States
- Hotel Values: In past cycles full service hotels took about 7 years to get back to previous peak pricing and limited/midscale properties took about 4-5 years.
- Low or negative EBITDA, mandated reserves at closing, all cash transactions, seller financing, higher rates/spreads and lower LTV requirements by lenders will put downward pressure on pricing.
- Pricing Impacts due to COVID-19 in three different scenario projections (Best, Most Likely, and Worst)