NEW YORK CITY– Long Island Hotels are looking at a year-end ramp-up in revenue and occupancy rates for a dip entering the 2020 New Year and into 2021, according to research from CBRE Hotels Research forecast for growth in revenue per available room.
CBRE projects had a RevPAR increase of 3.7 percent, well above the national average, with occupancy up by 2 percent over 2018, and amidst a 0.4 percent reduction in supply for the year, according to CBRE data.
With hotel performance slated to slow down amidst increasing supply, the annual increase in the average daily room rate for Long Island properties will remain steady at 1.5 to 2 percent as a result of slow market growth, according to Mark VanStekelenburg of CBRE Hotels.
In 2020 and 2021, hotel occupancy is slated to decline by 1.9 percent with RevPAR expecting to dip precipitously and then flatline in 2021.
"We foresee estimated annual GDP growth rates ranging from 1.5 percent to 2.3 percent from now to 2022. While these numbers anticipate weaker economic growth, they do not anticipate any major setbacks in the economy," said R. Mark Woodworth, senior managing director of CBRE Hotels Research, in a prepared statement. "Our forecasts for RevPAR change follow the same general pattern – growth, but at low levels ranging from 0.8 percent to 1.9 percent."
The economy is forecasting steady revenues into year-end but is expected to lose steam at some point. Hotel operators will look to keep their expense growth under 2 percent to achieve nominal gains in gross operating profits with revenue forecasts hovering around 1 percent, and manage upward pressure on wages due to a tightening labor market. This is could prove a challenge for some operators who have averaged 4 percent annual growth over time into their underwriting.
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Mariah Brown
Mariah Brown is the New York Bureau Chief and Real Estate Reporter for GlobeSt.com, covering the New York Metro area, Northeast region and national real estate trends. She is responsible for producing multi-media content, including articles, podcasts and video. Before joining the GlobeSt team, she served as a New York Times fellow, reported for the Associated Press in New York and Philadelphia and several other New York City-based outlets.
