HOUSTON—According to Marcus &Millichap Real Estate Investment Services' Hospitality ResearchQuarterly Update, the hotel sector continued benefiting fromextraordinarily constrained supply and rising demand during Q22012. Interestingly enough, though occupancy was reported at 61%(versus 60% during the same period of 2011) and the ADR's annualchange was 4.3% above where it was a year ago, demand growth was at2% (versus 5% year-over-year) and revenue growth stood at 6.4%,down from 8.9% from the year before.

But don't panic, says David Luther, vice president and nationaldirector of Marcus & Millichap's National Hospitality Group.It's not necessarily a bad thing that revenue growth and demandgrowth are lower. "They were so low in 2009," he explains. "Asthings picked up in 2010 and 2011, we frankly experiencedabnormally high growth in demand and RevPAR. These will benormalized as we move forward."

He notes that a RevPAR annual change of 6% is nothing to sneezeat. There hasn't been a whole lot of product coming onto themarket, he explains; though lenders are willing to finance existingproduct (especially if the borrower has a strong hospitalityresume), funding for new construction simply isn't out there.Though some new supply is coming online for national chains such asHoliday Inn and Best Western, demand continues to outpace supply."One interesting factoid in the report: 17 states reported that,rather than new rooms coming on line, there were drops in availablerooms," Luther says.