Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Hotel REITs: Poor 2018 Despite Strong Year For Hotel Industry



  • Read Full Report on Seeking Alpha.

  • The hotel industry is booming, but don't tell hotel REITs. Powered by resurgent corporate travel, hotel demand set yet another record in 2018, offsetting increased supply growth.

  • Just when 2018 looked to be a bright year for hotel REITs, the sector plunged in the final months of 2018 amid economic slowdown fears, delivering a -13% total return.

  • The 102-month stretch of positive RevPar growth was snapped in September, primarily a result of tough comparisons to last year's hurricane-affected data.

  • Supply growth continues to hang over the sector and is most acute in the business travel segments and urban markets. REITs hold a disproportionate amount of hotels in this segment.

  • As the REIT sector is most sensitive to economic growth expectations, 2019 may be another volatile year. The sector trades at discounted valuations relative to the rest of the REIT sector.


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