Skift Take
Lower interest rates could jumpstart transactions and development next year, but the industry isn’t out of the woods yet.
Sean O’Neill
Hotel industry leaders gathered at The Lodging Conference in Scottsdale, Arizona, last week to discuss emerging trends in the hotel market.
Here are the key takeaways from the world’s largest hotel finance and development event.
1. Economic Outlook: Guardedly Positive
The general consensus of executives was that the Fed’s recent interest rate cut will boost enthusiasm for U.S. hotel development in 2025. However, executives cautioned that rates will likely remain higher than the average since 2008.
“The [Federal Reserve’s interest rate cut of] 50 basis points was great, but it doesn’t change the IRR [internal rate of return] math that much,” said Kevin Davis, Americas CEO, JLL Hotels & Hospitality Group. “Yet it certainly changes the psychology.”
Many expect another 50-100 basis points of Fed easing over the next 6 to 8 months, potentially sparking more deals.
Some buyers may adjust expectations that interest rates aren’t likely to return to previous lows and begin to accept offers they’ve recently been hesitant about.
Example: Vision Hospitality CEO Mitch Patel said his company has built more than 60 hotels over the years and has another dozen under development, with five under construction. Patel liked how there’s been below-average supply growth for the past several years, which should help support hotel rates for several years.
2. Deals Poised for Comeback
Executives said money has been sitting on the sidelines waiting for attractive deals. Some time-limited funds will have to return …
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