Hotel Occupancies, Rent Growth Remain Strong, with a Positive Outlook for 2019

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Hotels are doing better than ever. More rooms have been occupied in 2018 at higher rents than ever before.

“We are at peak performance—and we don’t expect that to change much,” says Jan Freitag, senior vice president of lodging insights for research firm STR.

Hotel owners still worry about the rising costs to operate their businesses, however. Even though the average revenue produced by hotel rooms is likely to keep rising, room rates are not growing as quickly as the cost of operations.

“The name of the game is cost control,” says Freitag.

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Kahler Grand Hotel in Rochester will get $30 million renovation

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The Kahler Grand Hotel, Rochester’s oldest hotel property, is getting a major upgrade starting next month.

Kahler Hospitality Group on Thursday announced a $30 million renovation project for the hotel, a plan that will include nearly all hotel floors and expand the size of nearly 200 rooms. The 660-room hotel will cut the number of units to 605 as a result of the project.

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Four Seasons commits to opening hotel on Nicollet Mall

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The on-again, off-again courtship of Four Seasons Hotels & Resorts by United Properties looks like it’s going to end in a marriage.

The Toronto-based luxury hospitality company has committed to opening a 280-room hotel and restaurant in the 37-story downtown tower that United Properties is planning at the northern end of Nicollet Mall.

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Buyers See Limited Upside in Hotel Acquisitions

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It’s hard to imagine how things can get much better for the U.S. hotel sector, and that can make it surprisingly difficult for investors to find acquisition deals that make sense.

“Right now, we are in the strongest occupancy environment ever recorded,” says Jan D. Freitag, senior vice president of lodging insights for research firm STR, based in Hendersonville, Tenn.

That’s great news, but many potential buyers of hotel properties now hesitate to assume that they can squeeze much more income out of new acquisitions because average occupancy rates are already so high. Many potential sellers are also hesitant. That’s because even if they can get a good price for a hotel property, after the transaction closes they may not be able to find another attractive property to buy.

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