U.S.: What a Difference a Half Decade Makes
From a demand perspective, it is interesting to note that four of the five top historical growth markets are located in Texas. From 2005 through 2008, these markets saw increased lodging demand due to the unfortunate impacts of several gulf hurricanes. In addition, the surge in oil prices during 2008 helped to fuel the local economies. Despite the strong increases in demand, only two of the Texas cities (Austin and Houston) appear on the list of Top 5 markets in terms of RevPAR growth during the same period.
Charts 3 and 4 illustrate these same measures for the next five years, 2009 through 2013. Like they have the past five years, San Antonio, Forth Worth, and Austin are expected to enjoy great gains in demand in the future. Unfortunately for hoteliers in these markets, the competition is going to become more intense in the future. All three cities are projected to experience some of the greatest increases in new lodging supply.
Opposite of the Texas experience, hotel owners and operators in Tucson and Atlanta are forecast to benefit from significant increases in demand concurrent with relatively low levels of new hotel openings. With demand outpacing supply, Atlanta and Tucson area RevPARs are forecast to grow at a strong 8.2 percent CAGR during the next four years. A combination of above average growth in occupancy and ADR will propel the RevPAR in San Diego to a 9.1 percent CAGR from 2009 through 2013.
Research conducted by PKF Hospitality Research found that 70 percent to 80 percent of a hotel’s performance is systemically linked to the local economy. Therefore, it is imperative for all lodging industry participants – lenders, investors, and managers alike – to gain a thorough understanding of the unique local factors that influence each individual asset in which they have a stake.
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