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US hotel trends impacted by credit crunch and green movement
The credit crunch, a weak US dollar, new construction, green building, globalization and rapidly shifting US demographics are factors that will shape the US hospitality sector in 2008, according to a report released by Ernst & Young.
“Conventional wisdom might suggest that the US hospitality sector is likely to suffer if we head into a recession, but the unique fundamentals of the hotel industry over the last few years suggest otherwise,” said Michael Fishbin, Hospitality & Leisure Practice Director for Ernst & Young US.
Mr Fishbin points to a supply growth slowdown prior to last year’s correction in the debt markets as contributing to the positive cycle in the hotel sector.
“With the financing tap essentially turned off for a few months and underwriting terms changing dramatically, there will be less new construction in the next two to three years than originally planned,” said Mr Fishbin. He added:
“Essentially, supply will continue to maintain a balance with demand.”
US hotel operators and investors are looking to Europe and Asia in search of new opportunities.
Other trends in the report:
—Continued growth in the condo hotel/destination club sector as more Baby Boomers seek second home options in the US and abroad,
—A proliferation of ‘green’ hotels as construction premiums for green building designs and shortened cost recovery times encourage developers to pursue sustainable properties.
—Further emphasis on branding both at the tourist level (by cities and regions) and the property level (by operators) as companies look to gain market share – and increase the bottom line – in a much more competitive marketplace.
Report by David Wilkening
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