2020 Hotel Transactions and RevPAR
— 10 experts shared their view
Based on survey results, the panel is bullish (median 67.5%) on the prospect of the 2020 transaction market beating 2019's tally of $62 billion. Interestingly, nearly 1/3 of the panel is 100% confident of this! On the other hand, the panel's outlook on U.S. RevPar for 2020 (median at 50%) is gloomier with nearly 2/3 of the panel believing it less than 50% likely to exceed STR's forecast of 0.5% growth.
Questions to panel experts: Why are you so bullish on hotel transactions but more conservative on RevPAR? If hotel operating performance stagnates, why will there be such continued interest in acquiring hotel properties? Should growth in hotel performance (i.e., RevPAR) not be a significant force driving hotel transactions and values? For the naysayers on transaction growth, why is this the case?
Senior Director, Head of Planning & Development and Valuation at Horwath HTL
The search for commercial real estate yield continues globally, and "beds" are the new black. Hugely fragmented hospitality markets outside the US provide a tempting source of yield for investors wherever they are. Risk of RevPAR stagnation in the US forces capital to venture elsewhere. Alternative accommodation products have given tired and obsolete assets a new lease of life, with many offering higher potential returns than traditional hotels. We've seen "asset light" strategies for a while now; but "people light" is the new wave for many. Consolidation of asset ownership is one of the key issues facing the global hospitality industry; arguably way behind other industry sectors.