New Hotel Supply and Strong Economy Influence Hotel Forecast

U.S. hotel construction pipeline - state of hotel real estate

New hotel rooms coming onto the U.S. market shouldn’t be a concern for established hotel operators because demand will continue to exceed moderating new-supply levels through 2019, according to the latest CBRE Hotel Horizons report.

CBRE Hotels Research estimated that supply peaked at a 2 percent increase in 2018 and predicts new supply will begin declining over the next few years. This is evidenced by the declining number of projects entering all phases of the development pipeline, according to CBRE’s analysis.

“On a broad national basis, the supply increases have been surpassed by lodging accommodation demand growth for the past eight years, and this trend is forecast to continue through 2019,” said Mark Woodworth, senior managing director of CBRE Hotels’ Americas Research. “However, when you look at the projected 2019 performance of the 60 major U.S. markets in our Hotel Horizons universe, you can clearly see the impact of new lodging supply at the local level.”

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“Now more than ever it is important for owners and operators to understand their local hotel market conditions and local economies when preparing their budgets for 2019,” Woodworth continued. “It is easy to be enthusiastically mesmerized by the positive outlook for the nationwide lodging market. However, don’t be caught off guard by not understanding what is happening in your neighborhood. It is very evident that local economic conditions, as well as changes to the local lodging supply, are going to significantly impact the performance of U.S. hotels in 2019.”

 


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