HVS | January 02, 2020

The Global Hotel Industry Outlook report provides expert insights into regional performance for Asia, Canada, Europe, India, Mexico, Middle East, and the United States

The Canadian lodging industry has reached peak performance levels—RevPAR and profitability are at all-time highs. However, growth has slowed since the summer, and operating performance appears to be shifting into a lower gear. Growth in the Canadian lodging sector is slowing, but the country remains a sound market for investment. The fundamentals of the industry are healthy, and demand growth is expected to keep pace with supply increases next year, resulting in moderate RevPAR growth on a national basis. Owners have a variety of debt options at competitive rates, which is fueling an increase in construction and transaction volume. Growth is anticipated for the lodging sector, albeit at a more modest pace than in recent years. Learn more about the Canadian Hotel Industry Outlook

 

The European hotel industry remains robust with strong fundamentals, albeit with certain areas of concern and pockets of opportunity across the continent. With the IMF forecasting 1.5% GDP growth for the European Union in 2019, the European economy will be recording its seventh year of expansion in the current economic cycle. Key hotel markets such as London, Paris, and Rome are generally supply-constrained and continue to show significant demand growth both from within the continent and from overseas visitors. As a result of these wider economic and tourism trends, the European hotel industry has seen demand-led RevPAR growth in 2019 and managed to maintain profitability levels despite pressure on margins through increasing wage costs. Learn more about the Canadian Hotel Industry Outlook

 

At the start of the current year (2019), the prescribed view of many industry pundits, including ours at HVS, was that of optimism due to the strong performance witnessed in 2018 that was propelled by the ongoing widening of the demand-supply gap. Surely so, the first quarter of 2019 beat market expectations, and later in the year, the sector benefited from easing of Goods & Services Tax (GST) rate on hotel room tariffs across the board. But successive negative impacts on the sector drained much of the enthuse. The outlook for the Indian lodging industry is one of caution due to the decline in demand growth and economic headwinds shrouding the benefits accrued over the recent years, largely attributed to the increasing demand-supply gap. Learn more about the India Hotel Industry Outlook

 

The evolution of Mexico’s hotel industry over the past 25 years has accompanied important structural economic and political changes, including greater integration to the global economy and the gradual, if at times inconsistent, construction of democratic institutions. It has similarly accompanied key trends in the global hotel industry, including development of a wide array of lodging products, rapid evolution of distribution systems, and merger and acquisition activity, to name just a few. Over the past year, as business markets have experienced declines resulting from economic and political uncertainly, most leisure markets have similarly felt limited impact. Learn more about the Mexico Hotel Industry Outlook.

 

It is amidst a turbulent economic outlook and political instability that the region continues to diversify its economic reliance on oil production and to commit large investments on tourism and non-oil related sectors. The Middle East region continues to face distraught on the back of ongoing political conflicts and a fragile energy sector. The region has undergone a range of socio-political and economic shifts that have undoubtedly continued to impose ramifications pertaining to the ME hotel industry. As primary markets continue to mature and become saturated with four- and five-star hotels, and as secondary markets begin to progress, supported by improved modes of accessibility and infrastructure development, the Middle East will continue to present attractive investment opportunities. Learn more about the Middle East Hotel Industry Outlook.

 

According to HVS research, the South East Asia market is on a trajectory to add 170,671 hotel rooms (or 8.6%) to the overall hotel room supply between 2019 and 2023, translating to a five-year CAGR of 1.7%. Over the years, South East Asia has been experiencing an unprecedented hotel development boom, with most of the hotel room supply focusing on major urban and suburban markets in the upper-midscale through upper-upscale market segments. The South East Asia (Indonesia, Malaysia, Myanmar, Philippines, Singapore, and Vietnam) lodging industry experienced mixed sentiments for 2019. Despite growth in tourism arrivals, the ever-changing political climate, mercurial global economic conditions, and growth in accommodation supply are few of the many reasons that continue to put downward pressure on several markets. Even with the headwinds, the underlying dynamics behind demand growth appear to be resilient and are expected as such going forward. Learn more about the Southeast Asia Hotel Industry Outlook

 

The U.S. lodging industry remains in a period of heightened performance, with RevPAR hovering near all-time highs, profitability strong, and values more than fully recovered from the lows of ten years ago. With the market peak extending well beyond what most thought possible several years ago, many hotel owners are relatively well positioned to continue benefiting from sustained peak performance. Although the cloud of economic uncertainty is looming over the outlook for the next 18 months, no major shift in market dynamics is expected through the near term. Learn more about the U.S. Hotel Industry Outlook