In Midyear Outlook, a Look at Economic Growth, Occupancy, Airbnb

NATIONAL REPORT—Consumer and business confidence remain at record levels, supporting economic growth and boding well for all types of commercial real estate properties, according to a Marcus & Millichap 2018 midyear industry outlook report.

Among the highlights:

U.S. economy continues strong

Economic growth surpassed 4% in the second quarter, lifted by strengthened consumption and business investment. The new tax law has stimulated the economy by increasing after-tax earnings and pushing consumer and business confidence to near-record levels. This combination has sparked elevated spending and accelerated job creation. Through the first half of 2018, the economy added over 1.3 million jobs, driving unemployment below 4% and boosting wage growth to 2.7%, its highest level since the onset of the recession.

Occupancy is trending higher

Healthy room demand continues to push occupancy to new highs. The rate achieved a 30-year high in June and the trend will continue through the remainder of the year. Elevated occupancy continues to support growth in revenue per available room (RevPAR). RevPAR will outpace last year’s growth as the sector is supported by strong economic tailwinds.

Hotels are evolving with guests’ needs

The rise of popular home-sharing services like Airbnb and HomeAway have created uncertainty for many hotel owners and the industry has begun to adapt to these evolving consumer preferences. While many individuals prefer the local experience that these services provide, they also prefer the product of traditional hotels.