Our US lodging outlook remains stable, driven by a continued increase in consumer spending; increasing, albeit decelerating business investment; and relatively strong consumer confidence.
Despite near-term risks, solid economic fundamentals support decelerating RevPAR growth in 2019.
- Fourth quarter lodging fundamentals came in just below expectations, with year-over-year RevPAR growth of 2.4 percent, driven by an average daily rate increase of 2.0 percent.
- Despite concerns over the impact from the trade tensions with China and rising construction/labor costs, the US lodging industry ended 2018 on solid footing, with occupancy reaching levels not seen since 1981.
Lodging supply is expected to increase at a rate close to the long-term average; however, tightening financing conditions and further increasing labor/construction costs may cause a drag on supply growth. Overall, RevPAR in 2019 is expected to increase at a decelerating pace, driven exclusively by growth in ADR.
Counter-balances to this outlook to be watchful of include any negative near-term impact from the partial US government shutdown, continued trade tensions and effects from tariff-rate implementation, political uncertainty amid partisanship, and increasing interest rates.
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