While the influence of rising inflation and interest rates create new challenges for the lodging industry, during the near term, investment in U.S. hotel property is anticipated to remain desirable and at attractive valuations.
Underscored by the strength of room rates, copious amounts of leisure patronage and rebounding group business, the pace of travel recovery has been robust.
While business forecasting will always be critical to making well-founded decisions, it is important to be cognizant that predicting the unpredictable is to some extent a crapshoot, and that accurate forecasting is based in part on science and luck.
During 2021, vaccines and booster shots paved the way for a brief return to some semblance of normalcy, however as we enter 2022 the nearly two-year global health crisis is not over.
Sophisticated hotel market participants routinely consider the sector’s highly fluid strengths, weaknesses, opportunities and threats.
In the recent past, many appraisers retained by lodging property owners in connection with tax assessment appeals have erroneously used a “going concern” premise to valuation, resulting in wide differences in hotel property value estimates between opposing appraisers.
The moral of this story (blog) is, do not necessarily believe everything that you hear and/or read.
Savvy investors who deploy capital into U.S. hotels at market pricing, and if need be, are ready, willing, and able to hold for ten years, will invariably achieve superior risk adjusted returns when compared with other asset classes.
Within the commercial real estate world, the term “net absorption rate” is a riveting metric for debt and equity investors as well as property and asset managers. However, in the lodging industry, it is not a term that is widely considered.
After a rapid rebound in U.S. economic growth during Q2 2021, news of the fast-spreading Delta coronavirus variant over the past several weeks has created a cloudier outlook. Today, there are two perspectives from which to dissect the near-term future, namely glass half empty or glass half full.