Hotels Still in the Sweet Spot for Growth
The firm is forecasting unit-level NOI increases of 12.4% in 2014, and another 14.2% percent in ‘15. The hotel sector has maintained annual profit growth of greater than 10% each year since 2011, the longest unbroken streak since the 1970s.
That five-year streak was maintained last year, albeit just barely, despite a slowdown in the pace of RevPAR increase. Woodworth chalks up that 10.1% NOI growth to a 5.4% gain in total hotel revenue, along with a 3.7% increase in operating expenses.
“An accumulation of market, operational and economic factors has resulted in a business environment that is very conducive to increases of both the top-line and bottom-line,” he says. “We are in the middle of the sweet spot in the business cycle for hotel profits.”