The hotel industry is seeing an upsurge. It can be attributed to economic recovery, demographic shifts, international demand and easier access to hotel bookings and demand for new properties is growing, especially in large areas.
According to Forbes, the revenue per available room in the hotel industry has seen a notable increase that property owners could not help but take advantage of this promising trend. A November PwC report has foreseen the 5.4 percent increase in RevPAR from 2013 resulting to a forecast of 8.2 percent for 2014. Moreover, in 2015 occupancy rates are also expected to rise to 64.9 percent, which is considered the highest level since 1984, and RevPAR to increase 7.4 percent. These trends are reportedly apparent in areas that are considered entry points.
In addition, according to Forbes, there are different reason why these gateway cities are seeing an upswing. But the most notable reason is the tech transformation because travelers seek less interaction with hotel staff but expect more from facilities like faster Wi-Fi anywhere in the property. In these areas, travelers may be spending less time in their rooms so they may be fine with smaller room accommodation although they prefer having the ability to book and check in electronically. Thus, online travel agencies (OTAs), such as Priceline.com and Expedia, are rapidly gaining market share in hotel bookings and boutique hotels are becoming more in demand.
According to Michael Barnello, president and CEO of LaSalle Hotel Properties, a real estate investment trust that owns 44 upscale, full-service hotels in 13 markets, "There's a trend more toward styling hotel offerings more toward what people want versus the old-school, one-size-fits-all approach."
With this positive trend in the hospitality sector, debt has become easily available for new developments with feasible business plans. Yet, investors who are looking into broadening their hospitality portfolios are still advised to carefully study the supply and demand as it is possible that in some markets, unlike New York where demand always beats new supply, overbuild might may surpass demand, according to Forbes.
