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