2015 Looks Like Another Good Year for Hotels

confetti flying through the air on New Years Eve 2015 at Times Square

Image: @timessquarenyc via Instagram

Those of us who have worked in hospitality long enough know the business is cyclical due to market forces of supply and demand. Fortunately, we have enjoyed several strong years as the economy rebounded from recession, and we are looking forward to another year of healthy growth in occupancy and rates.

The midscale segment — where most of M&R Hotel Management’s hotels operate—performed well in 2014 and is expected to continue to perform strongly this year. PKF Hospitality Research says revenue per available room, or RevPAR ̶ an indicator of profitability ̶ jumped 7.8 percent in 2014 and will grow another 5.5 percent in 2015.

Holiday Inn Staten Island front desk and waiting area with couches

Holiday Inn Staten Island

M&R has benefited from the up cycle as owners seek expert management for their new and existing hotels. We recently opened the newly constructed Holiday Inn Staten Island in our home market of New York and expanded into the Boston and Caribbean markets as operator of the Holiday Inn Express Braintree and Alegria Resort in St. Maarten.

Alegria Resort, St. Maarten guest bedroom

Alegria Resort St. Maarten

During the last 10 years, M&R Hotel Management has built a reputation for managing hotels efficiently, delivering excellent guest service and driving sales and revenue. While I’ll take an up cycle over a down cycle any day, I am confident our commitment to performance and quality and service will prevail in any economy.

The Lodging Industry’s Glass Is Half Full

Lodging industry executives have every reason to be positive this year.

The U.S. hotel industry this year is expected to report a 4.2 percent rise in average daily rate to $115, a 5.7 percent gain in revenue per available room (known as RevPAR, a key measure of profitability) and a 1.4 percent increase in occupancy to 63.1 percent, according to Smith Travel Research, which tracks industry performance.

Speaking last month at the 36th Annual NYU International Hospitality Industry Investment Conference in New York, STR president & Chief Operating Officer Amanda Hite described the industry’s projected growth in 2014 as “robust” and discounted fears that supply growth will now accelerate to the point where it outweighs demand growth. STR forecasts that U.S. lodging demand will increase 2.6 percent this year, while supply is expected to grow by only 1.2 percent.

M&R Hotel Management shares STR’s optimism. Our hotels are mostly in the midscale and upper-midscale industry segments. These segments are among the most popular with consumers, especially value-conscious business travelers and families attracted to the complimentary Wi-Fi, breakfast and shuttle service many of our hotels offer.

M&R benefits from operating hotels in the thriving New York market, which has seen record demand from leisure and business travelers, both domestic and international. The city had a record 54.3 million visitors last year of which 11.4 were international, according to NYC & Co., the city’s tourism development arm. This year, the number of visitors is expected to hit 55 million.

Granted, the lodging industry is notorious for being cyclical, and the 2008-2009 downturn was one of the most severe many industry veterans had seen. But all signs suggest we’re back – or close to back – to pre-recession performance levels and that we only at at midcycle, which means we have a good chance of having three to five more good years ahead.