Hospitality industry gearing up for next expansion cycle
Marcus & Millichap Real Estate Investment Brokerage Company recently released its National Hospitality Research Report for spring 2004, which indicates the hospitality industry is on the cusp of the next wave of expansion. I
In addition, for the first time since 2000, demand for hotel rooms turned positive.
“The hospitality industry was dealt two knockout punches in the form of recession and terrorist activity; however, the market was not down for the count,” commented Robert B. Hicks, first vice president and national director of Marcus & Millichap’s’ National Hospitality Group.
“Lenders have opened their coffers to hotels, giving hospitality investors the opportunity to benefit from historically low interest rates. This will aid in the hospitality market’s recovery as fundamentals are expected to make substantial gains in the next 24 months.”
The report indicated that the annual average occupancy will increase to 63.5 percent in 2004 with an additional 2.1 percentage point increase expected in 2005.
A corresponding 2.9 percent increase in RevPAR (revenue per available room) will be realized this year. The long-term forecast for demand growth is robust with 160,000 additional rooms needed from 2004 to 2006. Other highlights include: The leisure and hospitality industry will be one of the leading sources of job creation; Construction levels will remain low for the next 18 to 24 months; There will be stiff investor competition for available properties.
The report also found that the Northeast, New York City and Washington, D.C., are firmly entrenched in the growth phase, while Boston awaits a full recovery of business travel.
Occupancy in New York City is expected to return to the historical annual average of 76 percent this year with an even brighter outlook for 2005 of 79 percent. Operators will enjoy greater pricing power.
COPYRIGHT 2004 Hagedorn Publication
COPYRIGHT 2004 Gale Group
