While key indicators show that the US hotel industry remains strong, the sector experienced some softening in Q1 2016 relative to its extraordinary performance in 2015, transaction activity and RevPAR growth soften, but underlying fundamentals remain strong.
RevPAR growth slowed to an inflationary rate in Q1 2016, and hotel transaction activity declined significantly relative to the level of deal volume recorded in Q4 2015.
However, recalling that hotel occupancy climbed to a historic high and annual deal volume soared to the second-highest level on record in 2015, RevPAR growth and deal volume in Q1 2016 represent a return to normalized levels.
Given a strong outlook for lodging demand in the context of robust U.S. economic growth, we maintain a positive outlook for the sector in 2016.
- RevPAR growth for U.S. hotels softened noticeably in the first quarter of 2016, rising only 2.7 percent from the amount recorded for the first quarter of 2015.
- National lodging supply growth is expected to remain moderate.
- While substantial supply growth in select markets will likely be well absorbed in the long term, the short-term outlook is more uncertain.
- U.S. hotel transaction volume declined significantly from $13.4 billion in Q4 2015 to $5.2 billion in Q1 2016.
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