Michael Gerard is Marketing Director at GRS Group
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There are a lot of factors that are fueling commercial real estate’s hotel and resort sector.
Hotel News Now has a lot of great information about the current trends taking place in its May report on the hotel industry.
The one thing that our readers probably want to know is that there is a lot of construction taking place in the sector. HNN says that there are just over 161,000 rooms currently under construction right now, representing 1,241 total projects. That is a whopping 28.3-percent increase year over year. Higher-end hotels are seeing a lot of growth especially, with nearly 6,000 new rooms in 407 assets. This is likely a sign that the economy is improving, with an upsurge in business travel and luxury accommodations for people taking vacations with expendable income.
JLL’s hotel perspective is also positive. RevPAR, the abbreviation for revenue per available room, which is a key metric of the hotel industry, is poised to increase for the seventh year in a row. The firm’s report warns of hesitation in the economy, though, due to global concerns, such as the issues facing China.
But JLL points out that the improvement in the U.S. economy is indeed real, and should not be discounted due to fears of other nations facing financial struggle.
Another downside, HNN reports, is that minimum-wage increases could negatively impact the sector. The wage increases, it is argued, could decrease the earnings of larger hotel companies.
However, HNN also says that those concerns can be offset by low gas prices fueling summer-hotel travel.
Meanwhile, hotels are also taking a page from the retail industry and increasing the experiential aspects of lodging, instead of just renting units. Hilton, Hyatt, and other major chains, are launching boutique brands that cater to the local characters of neighborhoods, with architecture, food and other features.
Los Angeles especially has some luxury hotels right now that are affordable, most of them independent operations.
Bottom line, there are a lot of interesting things going on in the hotel sector of commercial real estate, from new innovations, to construction growth. If the economy keeps going in the right direction, that trend should continue.