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The first half of the year has gone well for the recovering hotel industry in many parts of the world, and we are set to sell (yet again) a record number of rooms. Financing is slowly becoming more readily available, and the pipeline is starting to fill up. But before breaking ground on a new construction, consider crunching the numbers. As a developer, knowing and understanding supply and demand in your market could mean the difference between your new property’s success and failure.
Look into the past
Only fools rush in. It’s not enough to know how many hotels are in the market now and how many people stayed in them last month. The key word here is trend. How has this market been developing over the last two, five, 10 years? Has occupancy gone up or down with supply increases? The answers to these questions, which will ultimately tell you whether a market has opportunity for growth or is overbuilt, can be found in a Historical Trend Report from STR Global.
Know your soon-to-be competition
After you have looked at trends in your target market and have come to the conclusion that there is a strong possibility for growth, you have to wonder … who else reached the same conclusion? Now it is time to review the development pipeline. Not all new properties can be spotted by looking at construction sites and “Hotel X Coming Soon!” signs. Find out what projects will be in the area, in any stage of development, from pre-planning to under construction. STR Global’s variety of Pipeline Reports will help you keep your finger on the pulse of the ever-changing hotel landscape.
Grasp the big picture, then look ahead
Now you have a pretty good handle on supply and historical demand in your market. You’ve seen the trends, and you know the properties that will become players in the future. It’s time to put it all together. After all, understanding supply and demand means understanding that these are determining factors in both ADR, RevPAR and your bottom line. Your Trend can tell you whether increased supply has negatively or positively affected performance in the past. But what will even more supply do in the future? STR Global Market Forecasts and STR Analytics DataCasts capitalize on a wealth of historical performance information, analyzing supply and demand to predict how markets will fare in the future.
In business, like life, there are things you can do and things you should do. You can build a new hotel. You should do your market research. Understanding how supply and demand have affected your target market will enable you to make the decisions that will lead to success. STR Global data provides you with accurate, actionable information that can be used as the foundation for those decisions.
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