Marcus & Millichap

National Hospitality Research Report

Third Quarter 2018

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Hotel Room Demand Escalates in Smaller Metros/Towns, Fueling Occupancy And Boosting Investor Interest

Rising travel predictions favor hotel sector. The accelerating economy, supported by strong employment growth and rising confidence levels, bodes well for hotel property performance. Consumer and business confidence remain at record levels, reinforcing expectations of healthy consumption and business spending this year. Elevated confidence levels will likely buoy room demand through the remainder of the year, keeping occupancy at a record high and supporting RevPAR growth.

Upper upscale and upscale hotels command buyer attention. Healthy economic growth, improving occupancy and steady gains in RevPAR are driving investors’ appetite for hotels. During the year ending in the second quarter, transaction velocity nationwide picked up 4 percent from last year. Increased competition for hotels and rising revenues elevated property values 6.8 percent during this same time to $107,700 per room on average.

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