Trends To Watch In The Hotel Industry: 2018

Whether it’s full-service or budget-friendly, hotels are an important sector in the commercial real estate world.

In its latest 2018 U.S. Market Outlook, CBRE projected an increased demand in hotels. And in the 2018 Emerging Trends in Real Estate Report, it was determined that “U.S. hotel occupancy levels are expected to be approximately 65.6 percent, the highest level of occupancy since 1981.”

But with changing demographics, updates in technology, and competitive hotel brands, it’s important that commercial real estate practitioners, investors, and developers stay on top of major trends affecting the lodging industry.

Increasing Brand Diversification

In recent years, several hotel brands have been introduced to the marketplace. Larger hotel companies are expected to diversify their brand by creating independent properties through soft branding.

Emerging Trends reports, “hotel owners and developers are expected to create campuses featuring two or more brands with distinct products and price segments that share back-of-the-house facilities.”

By creating these distinct brands, they are able to offer entirely different experiences that capture different crowds. One of the campuses may provide more high-end luxury features, while the other site could cater to budget-friendly travelers.

A Shift To Leisure Travel

According to CBRE, leisure travel will outshine business-related travel in the coming year and will become increasingly important in the hotel/lodging sector.

Hotel demand is projected to grow, but this shift to leisure travel means some markets will need to adapt to “fluctuations in international travel.” CBRE reports that the “growth in leisure [travel] demand is particularly explained by shifts in the hotel guest profile and the spending habits of U.S. age cohorts.”

People are craving the experiences that travel can offer. In fact, the 2018 Travel Trend Report by TrekkSoft says that the 30 to 50-year-old crowd (Gen X) is more interested in relaxing getaways, while 65+ (Baby Boomers) are looking for adventure outings and ways to socialize with other travelers.

More Smart Room Features

Hotel and lodging brands that successfully harness the power of technology are at an advantage. All areas of hotel design are adding more technology to provide flexibility for guests, along with offering more personalized services.

For instance, apps that guide guests throughout the experience are becoming the norm. Booking, check-in, service requests, and checkout can all be taken care of by the touch of a button on a hotel-branded app. Texting the concierge is replacing calls to the front desk. And rooms are adding more amenities such as personalized tablets where guests can control lights, temperature, and streaming services like Apple TV and Netflix.

But even with an increase in technology, studies show that hotel guests still crave human interaction and a personal touch. The challenge for hotels will be creating an environment that supports both.

Simpler, Natural Design Elements

U.S. News & World Report has noted a few evolutions in hotel design. Most notably, a trend toward pared down rooms and enhanced common spaces. (Many experts credit millennials for this change.)

Design is trending toward more simple and natural concepts. Trivago recently shared that in addition to larger communal spaces, hotels will feature more “live greenery” and “natural light.” The goal of connecting guests to the natural world is aimed at improving wellbeing and decreasing the stress of travel.

Curious about what other trends are affecting the hotel industry? Read more in the 2018 Emerging Trends in Real Estate report here.

Have you seen other trends in the hotel industry worth noting? Let us know in the comments below!

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haley_squareHALEY CLEMONS
MARKETING COORDINATOR
CRUNKLETON COMMERCIAL REAL ESTATE GROUP
HALEY@CRUNKLETONASSOCIATES.COM

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The Trend Report: Emerging 2015 Insights

trendreport

According to an industry insight report released by Transwestern last week, there are some interesting commercial real estate trends emerging from the first quarter of this year:

Wage growth is flat, but disposable income is up.


Unemployment has improved since the Great Recession, but employees are not receiving wage increases typical of past recoveries. However, consumer credit is 30 percent higher than July 2010, and consumer confidence is spiking. This could be due to the decline in the price of gasoline: a one-cent-per-gallon reduction in price of gas is equivalent to approximately $1 billion in consumer savings – money that can be spent elsewhere.

The national economy has recovered.

The labor market surpassed pre-recession levels, and the gross domestic product growth exceeded expectations. This growth is expected to continue through 2015, barring a geopolitical jolt. Despite these positive signs, the stagnant wage growth is a cause for concern. With the improving economy, wage growth should be more meaningful in the period ahead.

Consumer behavior is changing.

Immediately following the Great Recession, consumers opted to pay off debt rather than spend money. More recently, consumers have begun taking on more debt – total consumer debt has risen 5.0 percent since bottoming out in second-quarter 2013. This indicates growing confidence in household budgets and job security, so consumers are willing to spend more. Student debt has risen 84 percent since 2008 and totals nearly $1.2 trillion. As these students enter the work force carrying so much debt, they put off homeownership to rent instead. They also put off owning a car, partially prompting the need for companies to seek out transit-served locations.

Tenant behavior is changing.


Densification among office tenants remains strong, with companies taking approximately 10 percent less space per worker, according to a survey conducted by Delta Associates. For some industries, this reduction would likely be substantially greater. Similarly, advancements in technology are prompting retail tenants to lease less space.

Real estate is now an experience, not just a location.


The average consumer is now younger and more informed, forcing developers to adapt. Mixed-use projects are becoming more prevalent as they bring walkability, vibrancy and community together into a unique environment that appeals to the modern urban consumer.

Real estate is a preferred investment vehicle.


Annual office sales volume has risen 528 percent since the market bottomed out in 2009. Commercial real estate in the U.S. continues to be a safe haven for investors seeking higher yields with relatively low risk.

To read the full report CLICK HERE.

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404220_10150473102152791_1516819070_nKadie_Sig
KADIE PANGBURN
MARKETING COORDINATOR
CRUNKLETON & ASSOCIATES
KADIE@CRUNKLETONASSOCIATES.COM