The US lodging industry continues to enjoy the benefits of strong economic fundamentals as metrics on spending, global trade, and various manufacturing indices signal that America’s economy is poised for further growth.
Although restricting hotel development in M1 zones is not anticipated to reduce historical contributions of the sector, it is projected that over the long term, impeding new hotel development will reduce the potential economic and social benefits to NYC.
Although already a popular choice for hotel development throughout Europe, in the U.S., modular construction is a growing trend in lodging, particularly in connection with low-rise select and limited-service properties.
Tenants, both original since occupancy inception as well as investment ventures that acquire seasoned leasehold positions, must carefully consider the economic terms of a ground lease and factor into their underwriting the potential for dramatic ground rent increases due in part to resets predicated upon the evolution of a strong real estate submarket.
Notwithstanding recent successes because of the brand’s direct-booking campaigns, hotel owners and operators must vigilantly guard against continued attempts by OTAs and home-sharing booking platforms to make inroads into the lodging sector.
A lack of meaningful home-sharing standards and inconsistent experiences results in daunting challenges to manage guest expectations.
The development and ultimate presence of HQ2 will spur a vibrant hotel submarket, resulting in the refurbishment of existing surrounding hotel stock and the development of new lodging products.
The lodging sector needs to continue to push back on OTAs by investing in technology that creates seamless, friction-free booking of travel experiences.
Signs indicate rate and RevPAR growth won’t be as strong as in past years, so hoteliers need to consider different ways to cut costs and push profits.
While applying a direct cap rate to a prospective hotel investment may be useful for back of the envelope calculations, beware of the limitations produced by this approach.