We’ve officially hit the halfway point of the year, so it’s time to take stock.
As crazy as it is to believe, 2018 is halfway to being done. It seemed like from the start 2018 promised to be a year of transition for the industry, so it’s worth taking a moment to examine if that’s still that case and, if so, what exactly it seems like the industry is transitioning to.
Maybe it’s just me, but it really seemed like 2017 was the year of worrying. I’ve been to enough industry investment conferences to know the general attitude of “cautious optimism” is a persistent one, but you didn’t have to scratch at the surface too hard before unearthing a general unease and expectation that the party would be over sooner rather than later.
That bubbling pessimism seemed to have been vanquished at the beginning of the year as stocks sailed in relation to the passage of corporate tax reform in the United States.
“A lot of things look good and better than they did a year ago: GDP outlooks are good, corporate profits are good, everyone feels good at the moment, but it’s still TBD.”
That quote was uttered by LaSalle Hotel Properties President and CEO Mike Barnello during a general session panel at the Americas Lodging Investment Summit, which helped kick off the year in January. There is a certain level of dramatic irony in that I suppose given that the outlook for what will happen with LaSalle is definitely TBD, it’s almost six months out from when he made that comment.
The general perception seemed to be that tax reform would be gasoline on the fire for the hotel industry, spurring a level of business transient growth not seen in a great long while and possibly even more money filtering down to the typical consumer to spend on extra trips.
Here’s a look at the hotel industry has fared thus far this year, based on data from Hotel News Now’s parent company STR as of the end of May.
Occupancy has increased 0.8% year to date to 64.2%. Average daily rate is up 2.7% to $128.57. Revenue per available room is up 3.6% to $82.57. For reference, STR’s most up-to-date projections forecast 0.4% occupancy growth in full-year 2018 to 66.2% while ADR is set to rise 2.5% to $129.74 and RevPAR is expected to climb 2.9% to $85.89.
As we’re approaching 100 straight months of RevPAR growth, that all strikes me as moderately good news, but not quite the bowl-you-over, economic tsunami we were promised with the passage of tax reform.
Maybe that’s still coming and there just hasn’t been enough time for it to filter down. Maybe it is decent performance that marks time until the real end of the cycle is ushered in. Maybe we’ll know for sure six months from now.
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