Some hoteliers expected 2017 to be the year the cycle and the industry crashed. Those predictions haven’t come true, but neither have the most optimistic prognostications.
Well, we’ve officially passed the halfway point of 2017, the year when everything was supposed to come crashing down or at least signal that things are demonstrably changing. And yet, it hasn’t happened yet. Things seem to be progressing steadily. It might be slow and steady, but it’s steady nonetheless.
So while we all sit around and wait for the other shoe to drop, let’s take stock of what has and hasn’t changed in 2017.
The key performance metrics seem to just keep chugging along. May marked the 87th consecutive month of revenue per available room growth, and as Jan Freitag, STR’s SVP of lodging insights, recently pointed out, it’s been increasingly difficult to predict future performance late in the cycle. (STR is Hotel News Now’s parent company.)
How about we keep things going at least through June 2018 to make it an even 100 months.
Waiting on tax reform
President Donald Trump came into office promising, among other things, to reform the current U.S. tax structure. That has yet to happen, and there has been relatively little sign that it’s imminent. But based on the conversations in Congress and the White House, it’s still a clear priority that business people should expect to take shape in the relatively near future.
It’s impossible to deny the labor market is shifting in many ways, some of which can be viewed as positive for hoteliers and others that would clearly be negative. You hear universally that the cost and availability of quality labor is bad and getting worse, but as expected, the Trump administration has taken a decidedly more business-friendly approach to labor issues than its predecessor.
With Republican Congressional majorities, that trend could be expected to continue at least through 2018, and with a conservative majority in place on the National Labor Relations Board, hoteliers can expect policy to come out in their favor for the foreseeable future.
If anything, it seems like buying and selling in the hotel industry has bounced back a bit in 2017, when some were expecting the bid-ask gap to widen after a comparatively chilly 2016. This relates to my next item, but it seems like the thinking from some people is that now is the ideal time to buy, unless you truly believe hotel performance is about to go over a cliff.
The end of the cycle
I think we’ve been talking so long about when the cycle might have ended that some people have just decided that it must have happened already. That was the message from some at the 2017 NYU International Hospitality Industry Investment Conference in early June.
If this line of thinking is true, now is the time to hit the market because hotel values are only going to climb.
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