US RevPAR Forecast Lowered to 3%-4% Amid Signs of Fatigue
August 2, 2016 12:58pm
NEW YORK - August 2, 2016 - US lodging fundamentals are decelerating and signs of fatigue are signaling a negative turn could be ahead, according to Fitch Ratings.
We had expected RevPAR to accelerate modestly during the remainder of the year. However, lodging fundamentals are softening and RevPAR growth continues to decelerate, with 2016 likely to come in below the low end of our original 4% to 5% estimate. Supply is growing but restrained by available capital.
Fitch now projects that US RevPAR will increase by 3%-4% during 2016 and by 1%-2% during 2017, with monthly comparisons possibly turning negative during the latter half of the year. We expect 2018 to mark the first full year of RevPAR declines, assuming the historical six-to-12-month lag relationship between occupancy and RevPAR declines holds. US hotel occupancy will likely end 2016 down slightly.
Weak corporate transient demand will weigh on industry growth into 2017. Consensus expectations have second-quarter 2016 earnings for the S&P 500 falling at a mid-single-digit pace, arguably telegraphing weak corporate spending trends. Indeed, many companies have enacted (nonessential) travel restrictions in response to weakening business trends. Group demand is leading the industry; however, anecdotal evidence suggests that future booking pace has slowed. Consumer transient remains the bright spot, but the strong US dollar, higher oil prices and geopolitical events could weigh on leisure travel.
Additional information is available on www.fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
U.S. Lodging Cycle Concierge
u.s. revpar growth forecast
For 100 years, Fitch Ratings has been making the future a little more predictable through independent and prospective credit ratings, commentary and research. Our global expertise draws on local market knowledge and spans the fixed-income universe. The additional context, perspective and insights we provide have helped the world's investors fund a century of growth.
Contact: Elizabeth Fogerty
Contact: Hannah James
Fitch: Hotel Oversupply Raising US CMBS Loan Concern
Fitch's 2018 Outlook for U.S. Lodging: Fitch Predicts Uninspiring Growth, with Some Upside Risk from Brighter Corporate Outlook
An Analysis of Franchise Fees
Hotel Occupancy Continues to Reach New Heights but Rate Not Keeping Pace
Fitch: Need for Scale Could Drive More US Lodging Consolidation
U.S. Lodging RevPAR to Decelerate According to Fitch
Hotels Among Biggest Beneficiaries of Trump Economic Growth Policies Says New Fitch Report
Smaller US Hoteliers Will Take More Risk to Stay Relevant
Healthy Consumer, Spending Shifts Benefit U.S. Lodging & Leisure
Fitch Expects 1-2% US Lodging RevPAR Growth in 2017
Slow Growth, Higher Labor Costs to Challenge U.S. Hotel Margins Says Fitch Ratings
Cyclical Challenges Drive Gaming, Lodging, & Restaurant Bankruptcies
Boston's Lodging Supply Growth Outpaces Demand, Resulting in Lowered Projected Performance
US Leisure Strength Unsustainable; RevPAR Likely to Turn
With U.S. Hotels at Peak, CMBS Being Watched with a Wary Eye
Tourism Spending to Buoy US Leisure Sector Demand
U.S. Hotels Gain Incremental Negotiating Strength Over OTAs
US Lodging in Twilight of Latest Upcycle; Caution Ahead
Flexible Models Ease US Leisure Cos. Cuban Market Entry Says Fitch Ratings
Revised Starwood Offer Likely Delays Marriott's Ratings Momentum
Please login or register to post a comment.