The US Lodging Industry: Mid-Year 2011

NEW YORK CITY-With the global economic recovery slipping into lower gear, the US is experiencing a lethargic and delicate fiscal improvement of its own. Myriad international and domestic issues continue to exert negative pressures on the American financial system. Some of the most significant issues currently facing the world markets include: the economic solvency issues of Greece; ongoing tensions throughout the Middle East; and the looming August 2 deadline for Congress to raise this nation’s statutory debt ceiling. The last is to avoid what many fear would be a catastrophic crisis of confidence  if the US were to default, even technically on its debts. The national jobless rate continues to be persistently high and US home prices have yet to form a bottom. That’s the bad news; the good news is that according to a recent CNN Money survey, corporate America’s balance sheets will continue to improve, and earnings for S&P 500 companies are on track to rise 13% this year.

Even with a sluggish economy, US hotel occupancy, average rate, and resultant RevPAR is anticipated to remain positive. With the development of new supply of US hotel rooms relatively muted for the foreseeable future, lodging fundamentals are rebounding as corporate and group meeting business continue to increase from cyclical lows. The perceived long-term upside in the lodging sector has resulted in heighted transaction activity and pricing of all types of hotel assets.