Hotel Sector Remains Somewhat Steady
RevPAR (revenue per available room) – a metric of hotel occupancy is increasing at a slower pace than it did in the initial years following the 2008 economic downturn, according to a CoStar report (quoting data and analysis from Wells Fargo Securities). In 2011, gains were up 8 to 9 percent on average over each corresponding month in 2010. Between September 2012 and 2011, that number is up only 7.6 percent.
The average annual new hotel supply from 2010 to 2012 is 1 percent – well below the long-term annual average of 1.9 percent. This should help buffer the hotel sector during a stagnant economy (or slow recovery). The sales volume for hotel property through Q3 2012, is $11.3 billon – down 33 percent from the same period in 2011 ($16.52 billion).
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Despite the weakening fundamentals, hotel properties are making up a larger share of CMBS 2.0 deals, accounting for 13 percent of 2012 issuance for multi-borrower CMBS transactions. The hotel loan delinquency rate for fixed–rate CMBS conduit transactions is 11.03 percent – the lowest level since December 2009.
Last Updated on November 10, 2012 by Ramin Seddiq