ATLANTA—PKF Hospitality Research (PKF-HR), a CBRE company, has reaffirmed its near-to-mid-term forecast for strong lodging financial performance in the wake of recent fluctuations on Wall Street.
According to PKF-HR’s recently released September 2015 edition of Hotel Horizons, U.S. hotels will continue to enjoy above long-run average RevPAR growth through 2018.
“It is hard to ignore what has been happening on Wall Street, but the forecasts of employment and income that we rely on to prepare our estimates of future lodging supply, demand and ADR remain strong,” stated R. Mark Woodworth, senior managing director of PKF-HR. “The recent volatility in the stock market is an indicator of the uncertainty that persists in the U.S. and world economies. However, the probability of a downturn in hotel industry performance remains remote.”
If the lodging industry should stumble and that causes a retraction in expected performance, PKF-HR believes U.S. hotels are in a strong position to absorb the negative variance. Since the depths of the great recession in 2009, lodging demand growth has exceeded supply increases and is projected to continue to do so through 2016. This seven-year stretch of continuous occupancy growth is the longest such streak since STR, Inc. began reporting in 1988.
“During historical recoveries, as soon as occupancy returned to prerecession levels, we saw an immediate, strong uptick in real ADR growth. That did not occur this time around,” Woodworth said. “In real terms, prices are just now returning to their previous peak. The U.S. occupancy level is now a full three points above the 2007 mark. This performance premium represents a substantial cushion that should offset an unexpected decline in demand.”