Industry Insights|业界动态

Supply and demand imbalance will bring difficulties to the hotel industry

Admin2017-02-13 15:47:55

Recently, at the Americas  Lodging Investment Summit, many people have pointed out that the supply  of the hotel industry is greater than demand.

"2017 will be a year of supply that exceeds demand," said Mark Woodworth, senior managing director of CB Richard Ellis Research.

CB Richard Ellis predicted a declining trend

According to CB Richard Ellis, supply in 2017 will grow by 1.8%, demand growth of 1.5%. In  the past few years, the hotel industry has not been able to solve the  supply problem, but since 2015, supply growth is on the rise. According to CB Richard Ellis data show that the supply in 2016 increased by 1.6%, still below the demand growth of 1.7%.

In  the case of slowing employment growth and slowing ADR growth, CB  Richard Ellis points out that supply growth has a negative impact on  RevPAR. RevPAR is expected to grow by 3% in 2017, down 5.2% from 2014.

Investment forecast for 2017

Suzanne Mellen, Senior Managing Director, HVS, explains interest rate changes

In  terms of investment, Suzanne Mellen, senior managing director of HVS,  said cap rates have risen and will slow to grow in 2017, partly due to  higher interest rates and slower growth in RevPAR. Mellen expressed disappointment with the rise in supply growth and  said the new supply was widening the buying / selling gap, which in turn  affected the seller's expectations.

However,  the investment in the hotel industry will remain strong, overseas  groups should cross-border investment in the United States. "The investment in the hotel industry is still active, but it may be reduced, not as hot as in 2016." Mellen said.

Some noteworthy deals include: In October 2016, China Life led the  consortium to invest Starter $ 2 billion in hotel assets and Ampang  acquired the US hotel for $ 6.5 billion - in addition to the Blackstone  Group's Coronado hotel in San Diego.

Mellen pointed out that the REITs will rebound in 2016, they have  regained 80% of their value, is expected in 2017 investors will sell  assets.

When  asked about the best investment destination in the United States, Jan  Freitag, senior vice president of the industry, Jan Freitag, considered  California, and Mellen said that investment in coastal cities such as  San Francisco was still very expensive and that it was more difficult to  enter these markets.

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