As uncertainty weighs on the economy, softening lodging industry growth expected to continue

Following a weak first quarter, the US economy strengthened in Q2.

  • An initial second quarter GDP estimate of 2.7 percent and further solid contributions from consumer spending suggest that the US economy will remain on solid footing for the balance of 2017.
  • Overall, moderate demand growth in Q2 supported increases in both occupancy and ADR, resulting in a RevPAR increase of 2.7 percent.

Despite ongoing political uncertainty, consumer and business spending are expected to continue to support economic growth in the second-half of 2017.

  • Benefiting from rising employment, real disposable income, and household wealth, consumers have been a driving force of economic growth this cycle.
  • For the lodging industry, an increase in domestic spending is expected to help support growth in demand, though supply growth continues to be a meaningful downside risk.
  • ADR growth of 2.1 percent is expected to continue to outpace inflation, resulting in a 2.3 percent increase in RevPAR in 2017.

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