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Hotel REIT CEOs Expect Low Supply Healthy Demand in 2014

11/14/2013 | By Sarah Borchersen-Keto

Hotel REIT CEOs Expect Low Supply Healthy Demand in 2014

The hotel and lodging sector is benefitting from a combination of low supply, healthy demand, and strong corporate balance sheets, according to panelists at a REITWorld 2013 forum.

Jon Bortz, chairman and CEO of Pebblebrook Hotel Trust (NYSE: PEB), noted that in terms of supply, "it's a pretty good view through 2015." Ryman Hospitality Properties, Inc. (NYSE: RHP) Chairman & CEO Colin Reed agreed.

"I don't see the supply side changing until '17, '18," he said.

Sunstone Hotel Investors, Inc. (NYSE: SHO) CEO Kenneth Cruse remarked that "right now supply is very muted." He added that the current growth cycle in the sector has "all the hallmarks of a longer duration."

Jay Shah, CEO of Hersha Hospitality Trust (NYSE: HT), said the sector "can expect demand to continue to grow." He cited "greater democratization of travel" as one factor driving that growth.

Cruse told the forum that he expects to see growth driven by corporate business travel for the next few years, which has offset the downturn in government business. Meanwhile, Reed said demand from association business is "alive and well."

Turning to corporate balance sheets, Cruse pointed out that year to date, his company's labor and energy costs have both declined. "There are tons of opportunities to drive efficiencies in our business," he said.

The panel was moderated by William Crow, managing director with Raymond James & Associates.

View a webcast of the session.