Hotel profits forecast to recede

Depressed profits among US hotels expected for the next two years

Hospitality

By Allie Sanchez

Hotel unit profits are expected to dip beginning the fourth quarter this year, according to the recently released eforecasting.com baseline forecast. eforecasting is an international economic research and consulting firm.   

The forecast is based on historical data from Trivago, an online hotel search site with a presence in 39 countries, and the firm’s own cost per room index.

"The latest US Monthly Hotel Forecast confirms our prediction of a recession in hotel profits per room, which will begin in the fourth quarter of this year and last nearly two years," Dr. Evangelos Simos, economic advisor of predictive analytics for e­forecasting.com, explained.

“Year over year we forecast average quarterly declines expanding to negative 2.9% in the second quarter of 2018 based on our monthly model which evaluates unit revenue, cost and profit. We have used these insights to update our monthly model for the total US and top 25 US hotel markets,” Simos added.

"With our August Monthly Hotel Forecast for total US, we forecast very slow online rate growth this year – at 0.2%," Maria Sogard, e-forecasting.com chief executive observed. Sogard also noted, “We also see hotel capital expenditures down 1.2% to $1,775 million in July showing a decreasing trend in net capital expenditures.”
 

Keep up with the latest news and events

Join our mailing list, it’s free!