Ten-X ranks New York City second among metro areas in which market conditions might prompt hotel investors to consider selling their properties. Topping the list is Houston, where energy and manufacturing employment has declined by 6.8% year to date. With an influx of new supply coming on line, occupancies have dropped to 64% and RevPAR has fallen 15.6% year over year. Others in the top five are Pittsburgh, San Jose—in spite of a fast-growing economy—and Northern New Jersey.

Conversely, Ten-X has identified five lodging markets fueled by strong local economies and controlled supply growth, in which investors should consider making acquisitions. Las Vegas—which was among the leading “sell” markets in any sector during the depths of the Great Recession—tops the list, followed by Jacksonville, FL; Sacramento, Los Angeles and Indianapolis.

New York

IRVINE, CA—Own a hotel property in the nation's top destination for tourism? Now might be a good time to sell, says Ten-X in its latest Quarterly Hotel Monitor report. Although New York City isn't the top “sell” market for lodging properties, like its neighbors in Ten-X's top five it's seeing declining fundamentals in the sector, in most instances aggravated by an influx of new supply.

With a domestic economy that has managed to rebound from a series of global shocks, the hotel sector is expected to continue seeing modest growth through 2018, says Ten-X. The firm has forecast annual room rate increases of about 3.5% and RevPAR increases of 4% for this year and 3.7% in each of the two years to follow. With GDP gradually expanding, occupancies are expected to hit a record peak of 73.5% by '18 before declining to roughly 68.7% amid an expected cyclical downturn.

As the dollar has strengthened following the Brexit referendum this past summer, international travel to the US has softened. Ten-X sees this hitting high-profile markets such as New York City, Miami, Washington, DC and San Francisco especially hard. Business travel has also declined modestly over the past year, and may face an uphill battle in subsequent years as companies increasingly rely on videoconferencing and other tech-oriented solutions in lieu of face-to-face contact.

“While our research indicates the hotel sector will see modest growth over the next two years, a number of factors continue to erode demand, right as a surplus of supply prepares to hit the market,” says Peter Muoio, chief economist with Ten-X. He notes that although strong economic conditions in the West and other metropolitan areas nationally may still hold some allure, “these dynamics are combining to make the market an increasingly risky bet for investors.”

Ten-X ranks New York City second among metro areas in which market conditions might prompt hotel investors to consider selling their properties. Topping the list is Houston, where energy and manufacturing employment has declined by 6.8% year to date. With an influx of new supply coming on line, occupancies have dropped to 64% and RevPAR has fallen 15.6% year over year. Others in the top five are Pittsburgh, San Jose—in spite of a fast-growing economy—and Northern New Jersey.

Conversely, Ten-X has identified five lodging markets fueled by strong local economies and controlled supply growth, in which investors should consider making acquisitions. Las Vegas—which was among the leading “sell” markets in any sector during the depths of the Great Recession—tops the list, followed by Jacksonville, FL; Sacramento, Los Angeles and Indianapolis.