Global outlook for hotel industry rated as ‘stable’

December 22, 2015

According to rating agency Fitch, the 2016 outlook for the global hotel industry is ‘stable’ with favourable travel trends and stable financial policies providing positive leads.

“Middle class growth in emerging markets, relaxed barriers to visitation by some important destination countries, and growing consumer preferences for experiential rather than material purchases, means hotel RevPAR growth is here to stay for another year, despite some new and familiar risks to the sector,” said Stephen Boyd, Director of Lodging and REITs at Fitch Ratings.

The largest risks to Fitch’s outlook include geopolitical events that reduce travel demand, corporate reorganisations, and an unanticipated industry downturn with severe RevPAR declines. The rapid growth in online alternative accommodation websites also warrants closer scrutiny.

They believe the U.S. lodging upward trend will continue in 2016, even as investor sentiment checked-out this year on weak hotel share prices, modest guidance cuts and emerging competitive threats (e.g. OTA consolidation, Airbnb, Inc.). Austerity measures and structural reforms in some European countries will likely dampen consumer spending and temper rate growth in the region.

In Asia, China’s RevPAR growth will continue to pick up as the market moves closer to equilibrium from its current oversupplied position. Double-digit increases in tourism over the next five years and improving transportation infrastructure should also support growth.