Marcus & Millichap

2018 Hospitality National Research Report

Fourth Quarter 2018

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Holiday Season Brings Increased Travel to Hotel Sector;
Investors Target Limited Service Properties

Holiday travel ramps up as summer season concludes. A strong summer travel season supported further occupancy and revenue growth in the hospitality sector through the third quarter of this year. Property performance generally slows during the fourth quarter, but the beginning of the holiday travel season may support additional room nights through year end. Overall, occupancy continues to remain at record levels as healthy employment gains and rising wages support consumer spending.
 
  • Summer occupancy, between the months of June and August, rose 70 basis points from the same time period last year as room demand rose at a healthy clip. The strong travel season generated a 3.3 percent increase in RevPAR compared with the prior year.
  • More Americans are expected to travel this holiday season. In particular, an estimated 48.5 million planned to drive to their destinations on Thanksgiving. Those with longer drives may choose to stay at interstate hotels en route. Interstate hotels have registered considerable improvements recently, and annual occupancy was up 80 basis points ending in September.
  • Some families may choose to spend their holiday vacations in warmer locales. Markets like Miami, Phoenix and San Diego could benefit from rising room demand from these travelers. Phoenix in particular generates most of its room demand outside the summer months.

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