Q3 2018 US Lodging Market Update

What started as a bursting of the U.S. housing bubble between 2006 and 2007 and mushroomed into a failing subprime mortgage/credit market, ultimately resulted in the worst financial crisis since the Great Depression of the 1930s.  Ten years ago, the Great Recession of 2008/2009 was ushered in by a full-blown international banking crisis sparked by the collapse of blue-chip investment banks Bear Stearns and Lehman Brothers.  Through the end of Q3 2018, Wall Street is enjoying another heyday as profits for commercial banks are at a record high, the stock market is in its longest bull run in history, the U.S. economy is humming, and the Trump administration’s deregulation and tax cuts rule the day.  Furthermore, the globe is awash with diverse pools of debt and equity capital that increasingly favors real estate as a preferred vehicle for returns on and of capital.

High levels of U.S. consumer and business confidence are being fueled in part by low unemployment rates and rising wages both of which continue to have positive effects on the demand for US hotel room night demand.  Additionally, new transient hotel room supply continues to rise at a rate lower than the increase in demand, resulting in growth and record setting levels of national occupancy, average room rate, and revenue per available room, and a near term outlook of more of the same.