June 13, 2018

U.S. Hotel Industry Outlook - June 2018

The momentum in the U.S. hotel industry continues in 2018 after moderate growth in 2017. In first-quarter 2018, the industry witnessed a better-than-expected rise in demand, with RevPAR increasing by 3.5%.

Consequently, stocks in the Hotels and Motels Industry have put on an impressive show in the past year, handily outperforming the broader market, as a reflection of this positive backdrop. The Zacks Hotels and Motels Industry has rallied 20.2%, surpassing the S&P 500 index's gain of 14.5%.

The industry looks attractive, owing to rise in occupancy rate and gain in commercial transient demand. Further, we note that rising employment, higher real income and increased household net worth reinforced consumer confidence and sentiment. This has resulted in a steady rise in business and leisure travel, and higher transaction volumes, which are likely to continue.

Going forward, consumer and business spending are expected to keep the mood upbeat, suggesting that the U.S. economy will remain on solid footing in 2018. In fact, the Atlanta Federal Reserve's GDPNow model forecasts healthy 4.8% (annualized rate) GDP growth in second-quarter 2018.

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