Hotel Revenue Growth Falls To Its Slowest Pace In 5 Years

Irvine, CA–Hotel revenue growth during the third quarter of the year fell to its slowest pace since 2013, gaining just 2.7% from a year ago. Despite the ongoing economic expansion, demand for hotels and motels has plateaued, according to Ten X’s quarterly Hotel Monitor report, an analysis of macroeconomic and hospitality fundamentals across the US.

“This is basically a tale of two cycles with commercial real estate and the economy being robust and leading to an over-abundance of hotel rooms, thus making room rates cheaper,” says Peter Muoio, EVP and chief economist, Ten-X. “Plus people spending on hotel rooms certainly fits within the strong economic theme, however, they are also spending on experiences and that will trend into 2019.”

The report also shows that, even with the surge of monies in the European and Asian market, international tourism has declined with less people visiting the US.

“When people rise in income, they want to enjoy unique experiences and travel but a lot of them are choosing to tour other countries,” Muoio tells GlobeSt.com.

Data also confirms that hotel deal volume fell by 21% to $7.5 billion, in Q3 from Q2, but is still healthy and up 2.5% from a year ago. Hotel occupancies also peaked at 72.5% in 2015 and will drop to 67%, amid a 2019-2020 stress test, before returning to 71% by 2022.

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