Profit Growth Becomes Harder to Achieve for U.S. Hotels

The revenue growth forecast for hotels is expected to slow down, indicating that profits may be harder to hit this year. Revenue gains may have been positive for some, but only about 54.3% had seen any improvement in their GOP.

What Drives Growth

Historical data tells us that ADR growth is the one that boosts profits. Since 2016, though, ADR growth has been limited to about 3% or even less. That’s one of the many factors that could be responsible for the slowdown for many of the hoteliers in the business.

Labor Expenses Soar

Salaries along with wages and benefits for hotel employees saw a marked increase of 3.1%, which is greater than the recorded jump for all other operating expenses. Now, as labor costs amount to nearly 50% of operating costs for many hotels, businesses have a harder time on their hands as they control the wages and benefits.

Buying an Investment

Given the slowdown, this may be the best time for you to make an offer to a hotel business for sale. If you’ve been planning to buy a hotel for some time now and you want to start putting your plans into motion, this year’s low growth rate margins can be more than enough to lead many hospitality business owners to get out of the business. Many of them would be willing to accept your offer.

Shopping for Property

If you have a specific vision for the property you want to renovate or take over, then work together with experts. Look for top hotel brokers to help you find hotels that meet your criteria. Where do you want the property? What kind of target market do you have? What is the size of the property? What’s your budget? Knowing all these details and more can help them put together the best listings for you.

Paying a Visit

The best way to find out if the hotels tick off all the boxes is to pay a personal visit to each on your list. That should give you a clear sense of what you’ll be investing your money in and whether it’s a good match for what you have in mind. By hiring experts to help you, the deal will proceed much faster.

Conclusion

Diversify your portfolio and invest in the property you want. Start putting your plans into motion. Find the ideal hotel business for sale when you call NewGen Advisory.

Share This Post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email