NEW YORK—In a new report, Fitch Ratings answers the questions it is most often asked regarding the U.S. Lodging C-Corps and REITs.
Fitch believes that U.S. lodging fundamentals remain healthy given continued, solid U.S. economic growth and measured new lodging supply, notwithstanding choppy and generally weak RevPAR results for the industry as reported by STR Global in late August/early September.
The latest monthly data available from STR Global show August RevPAR increased by only 2.2 percent year-over-year, which is well below the mid-single-digit pace of growth for most of this year. Comparisons in August and September have been especially challenging due to the timing of the Labor Day and Jewish holidays. The two- and three-year CAGRs in RevPAR growth have generally remained more consistent. Again, the August calendar comparisons are likely weighing down the latest readings. Notably, the three-year RevPAR CAGR in August was slightly better than in June and November.
Some deceleration in RevPAR growth was inevitable, says Fitch. RevPAR was up 8 percent for the TTM ended July, which is roughly 200 bps to 300 bps stronger than the pace at similar points during the prior two recoveries.
The inclusion of August’s weak results dragged year-to-date RevPAR down to 6.7 percent from 7.4 percent at the end of July. The 7 percent RevPAR forecast for 2015 assumes that fourth quarter (4Q) results to recover some of the 3Q weakness caused by holiday timing this year.
