The hospitality sector is notoriously the most volatile of real estate asset classes. Business and leisure travel trends are highly correlated to broader economic conditions. And the sector does not have the benefit of long-term leases to help soften the blow of cyclical swings.
The effects of that fundamental nature of the sector are evident in our first exclusive research examining hotel investment. As a result, while the numbers are bullish and generally consistent with what NREI has found for other property types, that level of optimism is more muted. Moreover, the rise of third-party room and home sharing apps like Airbnb and VRBO is a growing concern for the sector and its outlook.
Overall, 76.9 percent of respondents pointed to those services as having an impact on the sector. Respondents had a lot of thoughts on these services in open-ended responses as well.
“There will be continued pressure on occupancy for extended stay and all-suite hotels from Airbnb, etc.,” one respondent wrote. Another added that a challenge for hotels is that owners will “have to differentiate from what can be found on Airbnb and VRBO.”
Suraj Shrestha is an associate at Harborside Partners. He has been taking the lead role on research projects; to develop and implement online marketing strategies for search engine optimization and social media marketing. He is one of the core parts for helping to grow business revenue and the company’s online presence.