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Report: Room Demand Rises in Smaller Towns

CALABASAS, CA—Hotel room demand escalates in smaller metros/towns, fueling occupancy and boosting investor interest, according to the Marcus & Millichap National Hospitality Research Report, Third Quarter 2018. Rising travel predictions favor the hotel sector. Analysts found that the accelerating economy, supported by strong employment growth and rising confidence levels, bodes well for hotel property performance, 

Consumer and business confidence remain at record levels, reinforcing expectations of healthy consumption and business spending this year. Elevated confidence levels will likely buoy room demand through the remainder of the year, keeping occupancy at a record high and supporting RevPAR growth, according to the report.

Upper-upscale and upscale hotels are commanding buyer attention. Healthy economic growth, improving occupancy and steady gains in RevPAR are driving investors’ appetite for hotels. During the year ending in the second quarter, transaction velocity nationwide picked up 4% from last year and increased competition for hotels and rising revenues elevated property values 6.8% during this same time to $107,700 per room on average, according to the report.

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