Hotel Room Demand Escalates in Smaller Metros/Towns,
Fueling Occupancy And Boosting Investor Interest
Rising travel predictions favor hotel sector. The accelerating economy, supported by strong employment growth and rising confidence levels, bodes well for hotel property performance. Consumer and business confidence remain at record levels, reinforcing expectations of healthy consumption and business spending this year. Elevated confidence levels will likely buoy room demand through the remainder of the year, keeping occupancy at a record high and supporting RevPAR growth.
- Healthy economic momentum and elevated consumer confidence levels have boosted travel expectations for 2018. Summer travel, in particular, is expected to rise 6 percent from last year and the majority of these trips will be to domestic destinations. Rising travel should reinforce hotel occupancy, which remains at a more than 30-year record high.
- Travelers are increasingly seeking hotels in suburban areas and smaller metros/towns. Occupancy in both locations has picked up considerably in the past 12 months after holding relatively steady in the prior year. Many local tourism offices are working vigilantly to lure tourists to these destinations.
- Older millennials, particularly in their mid to late 30s, are increasingly planning family vacations, with 44 percent anticipating to take one this year. This surpasses the percentage of boomers and Generation Xers who plan to do the same. Most of these trips will be road trips, potentially supporting demand for interstate hotels.
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