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Wednesday, 10 January 2018

Hotel Sector Remained Resilient Last Year, But Supply Should Pressure Metrics in 2018

The national hotel market continued to thrive last year, but further increases in supply will pressure occupancy, resulting in a slowing of revenue growth.

Commercial Real Estate Direct Staff Report

Hotel performance in the United States is still in the positive column, with occupancy and room rates both increasing last year.

But continued increases in supply will pressure occupancy, resulting in a slowing of revenue growth.

Hotel occupancy last year increased by 50 basis points to 65.7 percent, according to STR. That was substantially better than what had been expected - STR anticipated a 30-bp drop in occupancy. But the 2.1 percent increase in room rates, to $126.66, was less than the 2.8 percent increase that had been projected. Revenue per available room increased by 2.5 percent.

For this year, the Hendersonville, Tenn., research firm is projecting a 20-bp drop in occupancy, to 65.6 percent, and a 2.4 percent increase in rates, for a 2.2 percent increase in RevPAR to $85.06.

"We're really at the top" of the cycle, explained J.P. Ford, senior vice president and director of business development at Lodging Econometrics. "We're just bouncing along the top. No big declines, no big increases ... There's nothing really on the horizon that says we're in for a big downturn."

Wells Fargo Securities recently noted that 2017 might have been the year in which hotel performance growth plateaued. It says "hotel revenue growth is steadily descending."

                       U.S. Hotel Performance and Supply

STRHotels

                                                                     Source: STR Inc.

STR's forecast for this year assumed that tax legislation gets signed and the country continues to enjoy economic growth.

The tax cuts in the legislation could generate $131.7 billion of economic activity for hotels and related industries over the next 10 years, according to the American Hotel & Lodging Association.

Meanwhile, hotel fundamentals remain closely tied to general economic conditions. As the economy grows, so does demand for hotel rooms. Normally, as demand increases, the ability for hotel owners to increase room rates...





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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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