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Regulatory, Economic and Disruptive Factors in the Hotel Sector

Tax reform, job growth and Airbnb all play a role in how the hotel industry will fare in 2018. GlobeSt.com speaks with Ten-X Commercial's Anthony Falor about how he expects these factors to play out.

By Carrie Rossenfeld | Updated on November 29, 2017
Falor: “Global investors are still seeing great opportunity and safety in US real estate, with hospitality being one of the major investment sectors.”

IRVINE, CA—Tax reform, job growth and Airbnb all play a role in how the hotel industry will fare in 2018. While travel figures are up and the economy is strong overall, rising interest rates and uncertainty out of Washington, DC, present potential headwinds for the sector next year, and owners and operators need to focus on the ways their properties excel over short-term rentals. GlobeSt.com spoke with Anthony Falor, managing director of Ten-X Commercial‘s national hospitality group, about how he expects these factors to play out.

GlobeSt.com: Foreign travel figures were up early this year, and the economy is strong overall. Are these factors combining to drive an increase in hotel investment?

Falor: International currencies have strengthened in comparison to the dollar, making the US an increasingly attractive travel destination. In turn, we’ve seen an increase in tourism, and we expect occupancy to peak in 2018 at approximately 72.6% nationally—a historic high. That said, we are still seeing some room-supply concerns in markets such as New York; Charlotte, NC; Seattle; and Denver, and the development pipeline shows that we are likely to see an 8% surge in national supply by 2020.

In coming years, we expect the marketplace to digest the new supply, with occupancy easing to the low 70% range. However, this should not be cause for alarm. We will be coming off a historically high level of occupancy, and these slightly depressed figures are actually quite healthy. In the medium term, national occupancy will likely settle around 68% to 69%.

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