Aug
18

Hotel Supply: Where Are We in the Cycle?

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Beginning in Q1 2010, demand for hotel rooms started to increase. As this new demand outpaced the change in supply, increases in occupancy led to a recovery in ADR and profit margins during the second half of the year. In Chart 1 below, the full cycle is plotted with the current year denoted by the green circle.

Naturally, as we move up the cycle, we expect development activity to increase and eventually for new supply to enter the market. In reality, the cycle doesn’t always act according to its script.

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