Hospitality industry set for solid, if not explosive, year in 2017

by Dan Rafter

The nation’s hotel industry is set for another solid year in 2017, with the industry seeing higher room revenues and a greater number of newly delivered hotel rooms, according to the latest hospitality report from Marcus & Millichap.

This doesn’t mean that the hotel industry doesn’t face challenges. There’s Airbnb, of course, which Marcus & Millichap says remains a formidable challenger to traditional hotels. At the same time, Marcus & Millichap points to the White House’s strained relationship with Congress, which might slow the Trump administration’s efforts to increase infrastructure and defense spending.

Such a slowdown could impact the hospitality industry, as more infrastructure and defense spending could boost the national economy and inspire more business and leisure travel.

As for the numbers, Marcus & Millichap predicts that developers will add about 140,000 hotel rooms across the country this year. That is a jump from the about 100,000 hotel rooms that developers brought to the country in 2016.

Even with the extra rooms, though, occupancy levels will only take a small fall. Marcus & Millichap reports that room demand will increase during the year by 1.4 percent. Despite this increased demand, room occupany will slip to 65.2 percent, a dip of 30 basis points when compared to last year.

In more good news, both average daily rates and revenue per avaialble room should increase this year. Marcus & Millichap predicts that the U.S. hospitality industry’s average daily rate will increase 2.8 percent. This increase is a bit slower than last year’s 3.1 percent gain. Marcus & Millichap attributes this to increased competition from new hotels and home-sharing services.

Revenue per avaialable room will also see a small increase, rising by 2.4 percent this year when compared to 2016.

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