What's Influencing Hotel Pricing Today?

Muoio: “We expect pricing to remain constrained for the foreseeable future.”

IRVINE, CA—Plateauing hotel occupancy, coupled with the outlook of rising supply in many markets, has dampened revenue and returns expectations, causing pricing in this sector to stagnate, Ten-X‘s senior quantitative strategist Chris Muoio tells GlobeSt.com. As we recently reported, according to the firm’s December 2017 Hotel Nowcast, hotels also saw a pricing increase in December, and although in contrast to the steady gains made by retail, lodging values have seen their monthly ups and downs. For December, the Hotel Nowcast was up 0.8% and is now up 2% Y-O-Y in its strongest reading since last May.

Ten-X reports that improving consumer and business travel indicators, a weaker dollar—which makes US travel cheaper for foreigners—and improved economic conditions abroad, have all helped hotel pricing to plateau following acute weakness. That said, the threat of increased development means pricing is threading a course through conflicting supply-demand signals.