NEW YORK CITY—Notwithstanding the headwinds facing the sector, Kroll Bond Rating Agency cites “larger global demographic trends” working in favor of the hotel industry. “The growing middle class and number of millennials that have an appetite for travel and new experiences… should translate into increased visitation and room night demand for the foreseeable future,” write KBRA analysts who covered the 2017 NYU International Hospitality Industry Investment Conference, held earlier this week in New York City.

In a report summing up the two-day conference, KBRA director Laura Wolinsky and managing director Anna Hertzman note that as of April, there have been 86 consecutive months of RevPAR growth. “Although growth rates have been slowing, continued performance improvements are due to record demand levels driven by growth in the middle class and increased international travel paired with limited additions to supply in most major markets,” they write.

An active development pipeline has raised concerns about oversupply. A recent Lodging Econometrics report put the total number of US hotel rooms in the pipeline at nearly 600,000 as of year-end 2016, and KBRA cites STR data showing an 18% year over year increase in rooms under construction domestically. In 10 of the top 25 US hotel markets, new supply will increase the current supply by more than 6%.