CBRE – BLLA Boutique Lodging Forecast

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CBRE Hotels’ Americas Research (CBRE), in conjunction The Boutique & Lifestyle Lodging Association (BLLA), recently prepared their preliminary September 2017 forecast of Trends® and Expectations for Boutique and Lifestyle Hotels – U.S. Each quarter CBRE presents updated forecasts of performance for the boutique and lifestyle segment of the lodging industry based on four industry-competitive classification categories developed by CBRE and BLLA. Representative examples of the classifications utilized in our analysis and described herein are shown in the table below.

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In addition, the quarterly reports contain CBRE’s latest forecast data for the overall U.S. lodging industry, commentary on the vital economic indicators impacting U.S. lodging performance, and development activity within the boutique and lifestyle segment. As a bonus addendum, once a year CBRE extracts data from our Trends® in the Hotel Industry database and provide revenue, expense, and profit metrics for boutique and lifestyle hotels to assist owners and operators benchmark the financial performance of their properties.

The 2017 forecast performance for Boutique and Lifestyle hotels varies significantly by segment sub-category. Boutique properties associated with Soft Brands are projected to enjoy the greatest gains in RevPAR during the year, however, they will continue to achieve the lowest levels of occupancy and ADR. The Legacy Brand segment will see the greatest levels of new competition come on line in 2017. Therefore, these hotels that are affiliated with the boutique brands of the major hotel companies are forecast to suffer a second consecutive year of declining RevPAR.

 

Independent boutique hotels, and those that are associated with a Referral Group, will continue to achieve the greatest average daily room rates in 2017, and enjoy a modest increase in RevPAR. Properties affiliated with Boutique and Lifestyle Brands will experience a modest decrease in RevPAR for the year as gains in ADR are not projected to offset the expected decline in occupancy for this group. Looking towards 2018, all four sub-categories of Boutique and Lifestyle hotels are anticipated to post RevPAR gains, ranging from 1.8 to 3.0 percent. Soft brands are forecast to achieve the largest gains in ADR, although also the largest decline in occupancy of the four sub-groups of boutique hotels. Independent and Referral Group hotels are forecast to achieve the largest RevPAR gain, posting increases in both ADR and occupancy levels. Given the modest forecast for RevPAR growth over the next few years, it will be management’s ability to control costs that will enable continued profit growth. Additionally, as boutique hotels gain a wider acceptance and are able to market themselves effectively through social media and emerging technologies to an audience seeking a unique experience, we are seeing growth opportunities in secondary and tertiary markets that would have been uncommon in the last cycle. 

To subscribe to four quarterly editions of Trends® and Expectations for Boutique and Lifestyle Hotels U.S., please visit the CBRE website at pip.cbrehotels.com (Other Publications).