Hotel Experts Predict Demand Shifts, Gauge Inflation’s Impact on Room Rates

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Excerpt from CoStar

Hotel executives say demand for hotels is growing but different than before, and new supply will be limited for years.

The hotel industry is settling into familiar patterns, but several factors continue to keep hoteliers on their toes.

During a meeting of the Lodging Industry Investment Council, hotel executives spoke about how they’re adapting to conditions that are both familiar and new.

What feels normal now is the return of hotel demand, but what’s still abnormal is the desert of new supply looming over the industry, said Steve Van, founder of Van Investments. Nearly everything is in a state of flux.

“That’s why it’s hard to make predictions,” he said. “Nonetheless, we’ll be making them today.”

The industry is in a sort of new normal, and it’s starting to settle into the fact that the business looks different now, said Rob Leven, chief investment officer at Procaccianti Companies and TPG Hotels & Resorts. There’s been a disruption in travel patterns, and the post-pandemic world is reconfiguring what normal is.

“I’m not saying it’s all negative,” he said. “There are some positives to some of the reconfiguring, like remote work and the ability to extend business trips through Friday or Sunday to create additional demand.”

Many people got used to interest rates being near zero, but that wasn’t normal, said Charles Oswald, CEO of Aperture Hotels. Interest rates will decrease, but the base is going to settle in a place that’s higher than what people were used to. The rates will not go back to the lows from years ago, he said.

“There’s a different stabilization of interest rates and that affects our industry, and I think it’s going to take a while for [average daily rates] to catch up to the real business costs that we now realize in our industry. Labor is going to be costly for a while.”

PM Hotel Group President and CEO Joseph Bojanowski said he’s not sure that the industry has reached normalization, but it is in a more stabilized environment. With lower volatility, the business becomes more predictable, allowing hoteliers to plan and be proactive. Hoteliers got better at being reactive in recent years, whether it was to the pandemic, interest rate increases or changes in the capital markets. Now it has the opportunity to take a new approach, he said.

Hospitality Real Estate Counselors founder and CEO Mike Cahill questioned whether the end has come for the traditional cycle hoteliers are used to.

Click here to read complete article at CoStar.

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About Mary Weyand 11640 Articles
Mary founded Scoop Tour with an aim to bring relevant and unaltered news to the general public with a specific view point for each story catered by the team. She is a proficient journalist who holds a reputable portfolio with proficiency in content analysis and research. With ample knowledge about the Automobile industry, she also contributes her knowledge for the Automobile section of the website.

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