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Investors Divided On 2017 Hotel Outlook, Many Turn To Cash Flow

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Steady cash flow will be key for investors preparing to face the headwinds plaguing the industry this year.

The U.S. lodging sector suffered from a lack of transactions, further incursions from Airbnb and growing supply last year, yet managed to achieve an all-time high 65.4% occupancy record. But all that new hotel supply entering the market is likely to hurt occupancy rates.

Starwood Capital Group managing director of acquisitions and asset management Suril Shah said at the Hunter Hotel Investment Conference that investors should load up on income-generating investments rather than spend their time wondering when the next industry downturn will hit, Hotel News Now reports. Other industry leaders echoed their agreement with this approach, saying they expect the lack of transactions that hurt the sector in 2016 to continue into this year, making cash flow the safest bet.

Still, some are optimistic, expecting an increase in travelers this year compared to 2016, bouyed by the rise of low-cost airlines. While hotel industry experts may disagree about the prospects for 2017, nearly all agree that select-service hotels are the sector’s strongest area generating value and cash flow.