globest.com

The lodging sector’s multi-year run of double-digit annual NOI gains isn’t over yet. That streak will continue through the end of 2015, PKF Hospitality Research says in the latest edition of its annual Trends in the Hotel Industry report.

“By 2014, the average hotel in our Trends sample will finally achieve bottom-line profits greater than their pre-recession peak on a nominal basis,” says R. Mark Woodworth, Atlanta-based president of PKF-HF, a subsidiary of Colliers International. Perhaps more important is that hotel profits, in inflation-adjusted terms, “will exceed 2007 levels in 2015.”

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.”

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