Hotel Industry Outlook: Jim Butler's Top 10 for 2014

By Jim Butler Chairman, JMBM's Global Hospitality Group | January 12, 2014

Top 10 for 2014 - Hotel Executive Annual Outlook

A lot of exciting things are happening in the hospitality industry as 2014 opens. Based upon more than $68 billion of hotel transactions, JMBM's Global Hospitality Group® has made its "top 10" pick of the events, issues, trends, and developments that will have the biggest impact on the hotel industry.

1. 2013 Will Prove to be Better-Than-Expected, but 2014 Will Get Even Better. Sunny Times Ahead

Better-than-expected results for 2013 will lay a solid foundation for continued growth and profitability over the next several years. Supply growth will be only about .8% – well under the long-term average of 2%. Demand growth will exceed projections, probably reaching 2.2% to 2.4%. Most importantly, ADRs have been increasing at about 4.4%, bringing disproportionately greater profit straight to the bottom line. And finally, RevPAR growth will be somewhere in the range of 5.6% to 5.9%. The numbers for the upper end of the market segments are even better.

Depending upon whose numbers you select (STR, PKF and Pwc), 2014 just gets better. Supply growth will edge up to 1.1%. Demand will grow at somewhere between 2.1% to 3.1%. Occupancy growth will approach 2%. ADR growth will range up to 5.2%, with RevPAR growth between 6.0% and 7.2%. At the luxury end of the market, RevPAR growth is projected to grow at 8.3% in 2014.

These sound industry fundamentals are reinforced by the improving American economy. Recently revised GDP growth for the third quarter 2013 is at 4.1% -- the strongest advance in nearly two years and only the third time the economy has expanded that quickly from one quarter to the next since 2006.

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