primer domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/ikq167bdy5z8/public_html/propertyresourceholdingsgroup.com/wp-includes/functions.php on line 6114Managers of hotels’ assets are upbeat about the short-term prospects of the industry.
Even though there are worries about inflation, a possible recession, and some lingering effects of the pandemic, hotel asset managers expect RevPAR to be higher than in 2019.
The Hospitality Asset Managers Association (HAMA) just released the results of their Fall 2022 Industry Outlook Survey. These results show that hotel asset managers are optimistic about the hospitality industry. The report gathered the thoughts, experiences, and predictions of about 70 hotel asset managers about the hospitality industry from the start of the pandemic until now. The survey also asked what people thought about the state of the industry right now.
Some of the most important things are:
More than half of the asset managers surveyed think that most of their portfolios will do better than the budgeted RevPAR for 2022. Nearly half of those surveyed think that the overall RevPAR will go back to where it was before COVID-19 by 2023.
About 80% of them are looking for new opportunities to buy.
The American Hotel and Lodging Association (AHLA) has released data that backs up a lot of this good news. According to the report, leisure hotel revenue in the United States will be 14% higher in 2022 than it was in 2019.Business travel to hotels is expected to bring in about the same amount of money as in 2019.
Industry groups say that the U.S. hotel business is on the right track, but it hasn’t fully recovered from the effects of the pandemic yet. That’s mostly because business travel hasn’t caught up, which is likely because of changes made during the COVID era, like how many forums and conferences have switched to a virtual model. Geographically, the recovery is still not even. Sunny Florida is still seeing a boom in leisure travel, while big cities like New York, Washington, D.C., and San Francisco are expected to miss their 2019 leisure revenue benchmarks.
International travel restrictions are a big reason why some of these big hubs’ hotels haven’t fully recovered. Andrea Grigg, head of global asset management in the hotel & hospitality group at real estate services company JLL in Sausalito, California, says that before the pandemic, almost a third of tourists who went to San Francisco were from outside the country. “The lifting of restrictions on international travel and the reopening of almost all tourist attractions are expected to boost performance in the near future,” she says.
According to Grigg, the RevPAR for luxury hotels in August 2022 is 102.5 percent higher than the same month in 2019.This shows that the hospitality industry in New York is well on its way to recovery. “New York City continues to lead the luxury RevPAR recovery among urban markets, thanks to more leisure travellers and the return of customers who are less price-sensitive.”
Potential concerns
Hospitality asset managers say that the availability of workers (cited by 86.76%) and the cost of workers (cited by 85.29%) are their biggest worries. This is because the industry is struggling to find workers and the country is dealing with inflation and the risk of a recession. “There has never been a more important time to look at how well operations work. Even though rates are going up, it will be hard to get back to being profitable at the bottom in 2019, says Grigg.
Concerns about steady demand add to the risks of inflation and recession, with 42.6% of asset managers naming it as a major factor.
Even though labour costs are high and there are other worries, a large number of those surveyed are confident that RevPAR will return to 2019 levels for the whole U.S. at some point in 2023 or 2024. To back up this prediction, about 80% said that they are actively looking to buy other companies. Over half of them think that the prices of full-service and luxury properties in resort areas will go up, while only about a quarter of them think that selective-service properties and those in lower categories will go up in value.
Another good sign for the industry is that very few people say they had to give their keys back to their lender or go through a forced sale.
Many people in the hotel industry are still worried about inflation and a global recession, but Grigg says that people still have a lot of faith that RevPAR is on track to return to 2019 levels and beyond. She says that even though business travel revenue is down, the industry is set up to benefit from more flexible and hybrid work schedules, which give people time for longer weekend trips and other types of leisure travel that they couldn’t do before. Some companies are also making off-site meetings a priority because they are so important for building a strong company culture and employee engagement.
As far as inflation worries go, JLL research that Grigg cites shows that hotels are a defensive sector, with average ADR growth that is 40 basis points higher than inflationary growth from 2005 to 2021.
Grigg says, “Hotel rooms are rented out every 24 hours, which is a good sign in an inflationary environment. Hotels have always been a hedge against inflation because they can change their prices every day and every hour.”
