• Home / News / What Interest-Rate hikes mean for the U.S. Hotel Industry
  • Log in
Toggle navigation
Florida Land
1-727-771-9000
Contact Us
  • Home
  • Golf Courses
    • Florida Golf Course Links
      • Florida Golf Courses Directory
    • Golf Course News
      • Golf News 2019
    • Repurposing of USA Golf Courses
      • Golf Course Redesign
  • New Florida Homes
Home / News / What Interest-Rate hikes mean for the U.S. Hotel Industry
Info

What Interest-Rate hikes mean for the U.S. Hotel Industry

U.S. interest rates continue to make headlines, and many hoteliers are left wondering what it means for the industry at large.

 

While the 10-year treasury yield fell from 3.1 % in June to 2.8 % in July, it’s starting to creep back up. The yield now flirts with reaching 3 % again. In June, the Federal Reserve raised interest rates and uncertainty over several factors—including the Bank of Japan’s decision that could send bond yields higher, a president who criticizes rate hikes, and an expectation that the central bank will tighten credit and then raise interest rates—is causing many players to watch closely. Especially in an industry that has seen 100 consecutive months of year-over-year revenue-per-available-room growth, according to STR.

 

Hotels and golf courses for sale in Florida and throughout the USA. Prime Sites USA® sells franchise hotels, resorts, and land for hotel development. If you wish to buy, sell or build a hotel, we have the expertise to guide you to a successful conclusion. Call USA 1-727-771-9000

 

For its part, the U.S. economy appears to remain strong, increasing at the fastest pace it has since 2014 during the second quarter and hitting 4.1-percent growth. By comparison, the annualized rate of gains in gross domestic product was 2.2 percent in the first quarter. Meanwhile, consumer spending increased 4 percent and nonresidential business investment jumped 7.3 percent. All of that growth sets up the Fed for at least two more interest-rate hikes, one in September and one in December, according to sources.

 

But even so, July brought forth some good news for people borrowing money with interest rates not climbing as quickly as expected. That, coupled with the fact that banking regulations have become more relaxed under a new administration, has made the industry ripe with construction activity.

 

“The Trump administration has pushed for some relaxation on the Dodd-Frank regulations, particularly on small banks,” Jack Corgel, managing director at CBRE Hotels’ Americas Research, said in a recent video discussing U.S. hotel trends in July. “A lot of construction loans are generated by small banks, local banks. Therefore, there is a bit of a lift in potential for more construction loans to be issued. At the same time, labor is very difficult to put into these projects and other costs are rising. There are positives and negatives, which would be influencing construction activity.”

 

U.S. hotel supply was up 2 percent year-to-date through June, according to STR. As of June 2018, the U.S. had 5,146 hotels with 603,673 rooms under contract in the pipeline. Of those, 1,417 projects with 186,832 rooms were under construction.

 

But interest-rate uncertainty has long been on the industry’s radar. Rising rates will create pressure on the market, with buyers scrambling to lock in lower rates and sellers trying to leverage rates to maximize pricing, according to Peter L. Nichols, national director, National Hospitality Group for Marcus & Millichap.

 

Meanwhile, concerns about inflation and rising interest rates have driven volatility in equity markets, according to Marcus & Millichap’s “2018 Hospitality North American Investment Forecast.” That has caused investors to worry that rising rates will eat at their returns because higher borrowing costs have the potential to cut into profits.

 

Source: Alicia Hoisington / Hotel Management / 31 July 2018

 

 Land for sale in Florida LIKE US ON FACEBOOK



 

 

News
Can shopping malls survive the coronavirus pandemic? Jul 27, 2020
Escape the Coronavirus Disease 2019 (COVID-19) May 07, 2020
Numbers Show Golf Instruction Is Thriving Dec 03, 2019
PodDC Hotel Dec 02, 2019
Ireland's Tourism Development Authority seeks hotels for Dublin Nov 15, 2019
PrimeSites.World Oct 20, 2019
How Hotels are Going on a Fitness Kick May 28, 2019
Hotel Indigo Venice - Sant’Elena Opens May 07, 2019
World's Tallest Modular Hotel Is Expected to Open in Late 2020 As the AC Hotel New York Nomad Apr 19, 2019
Back to Basics: Top Five Email Marketing Best Practices for Hoteliers Apr 19, 2019
Marriott International’s Millennial-Geared Flags Coming to Midtown Tampa Apr 18, 2019
Golf Uses Less Water Than You Think Apr 16, 2019
First Portfolio of Health & Wellness Cannabis-Based Hotels Launching This Year Apr 15, 2019
Radisson Hotel Group Unveils the New Park Inn by Radisson Prototype Design at Its Americas Business Conference Apr 10, 2019
InterContinental Hotels Group Pilots Circadian Lighting Technology Apr 10, 2019
More news…

PrimeSitesUSA, LLC / Florida  Licensed Real Estate Corp. CQ1041068

Carl Carlsson, Florida Licensed Real Estate Broker BK3005836

Mailing Address: 3037 Gibraltar Blvd.,  New Smyrna Beach, FL 32168

USA Tel: (727) 771-9000

     

© 2021 primesitesusa.com — Powered by propertyshelf.com.