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Hotels Heading For A Cooldown In 2016


An uptick in hotel supply in 2016 will mean a slowdown in occupancy and RevPAR (revenue per available room) growth on the year, according to the 2016 US Hospitality Investment Forecast from Marcus & Millichap.

“The US hotel sector has reached a turning point,” the report says. “Following several years of rising occupancy, new supply will finally accelerate sufficiently to balance demand.”

The report notes that supply growth is set to rise 1.6% by year's end, a significantly higher pace than last year’s 1.1%, GlobeSt reports.

The trend of slowing growth is already underway, four of the 25 largest markets had double-digit RevPAR growth in ’15, compared to almost half the top 25 seeing double-digit gains in ’14. 

Topping off the supply pressures, hotel chains will face the additional difficulty of dealing with minimum wage hikes spreading through the country—New York and California just recently finalized minimum wage hike plans. [GS]