ATLANTA — The effects of geopolitical uncertainty on the hotel industry are playing out in real time.
And time is what it will take for more clarity, according to the hosts of Tell Me More: A Hospitality Data Podcast in their latest episode, recorded at the Hunter Hotel Investment Conference.
CoStar Group and Tourism Economics have not revised their U.S. hotel industry forecast of 1.8% revenue per available room growth this year. But on the heels of Oxford Economics' move to revise its forecast of 2.4% GDP growth this year down to 2% growth, industry analysts are sitting up, said Jan Freitag, CoStar's national director of hospitality analytics.
He said June will be the next forecast revision checkpoint.
"We'll have more data under our belt," he said. "Right now there's just a lot of chatter. Tariffs have just been implemented, the conversations about Canada are all just starting. We just need more insights before we change our forecast, but we'll see."
Isaac Collazo, STR's senior director of analytics, reminded listeners what "uncertainty" really means when considering broad industry health trends.
"I'm not going into this with gloom and doom because we really don't know. It's that uncertainty," he said. "I would rather be very happy saying things are great, but you can't do that right now because every day the news is changing. That alone is why people are being very cautious and really taking a step back."
To see hotel performance with a little more clarity, Collazo explained the concept of "core markets," which he defines as markets not currently affected by hurricane impact, wildfire impact or event-shifting impact, and therefore more consistent and disruption-free. He cited Las Vegas as an example of a market that experienced skewed performance results this year compared to last year when it hosted the Super Bowl.
RevPAR was up 3.6% in the core markets in February, and that's "much better than we anticipated," Collazo said. Further supporting the idea, he said that 17 of the top 25 U.S. markets are considered core markets at this time, and RevPAR grew 5.7% in February in those cities.
"It's all about micro markets; you have to look at almost every market," he said. "You cannot look at the top-line results and get depressed, or get happy, because you just don't know until you dig in."
Also in this episode
- Freitag explores how third-party hotel managers are expanding into luxury brands that typically were only managed by the brands themselves.
- Collazo shares some early data around the question whether government travel and hotel stays will slow down and the knock-on effect that might have on corporate business travel.
- Freitag compares the current state of industry uncertainty to the March Madness NCAA basketball tournament, while Collazo shares a Ringo Starr tune.