U.S. hotel industry should continue to see gains on top and bottom

Feb 24, 2018 8:49 AM

The U.S. hotel industry should continue to enjoy gains on both the top and the bottom line, according to a new report by Zacks Equity Research.

The report notes that consumer spending grew 3.8 percent in the fourth quarter after a 2.2 percent boost in the third. This trend is expected to continue through 2018, raising optimism for companies in the leisure and recreation space realms.

The report additionally cites a strong economy, higher income and stepped-up consumer confidence that has raised demand for both leisure and business travel. Zacks believes, given the positive economic outlook for the remainder of the year, there will be a ninth successive year of occupancy growth for the U.S. lodging industry. Zacks notes that an industry research projection forecasts 2.1 percent more occupancy demand in 2018 than in the previous year, outpacing supply that is expected to increase by 1.9 percent during 2018.

U.S. hospitality companies are increasingly targeting millennials, who form a significant part of the population and are generally more concerned about health, convenience, service and ethical sourcing of food, according to Zacks. The firm believes the factors are among the reasons big hotel brands are launching more lifestyle hotels, which are mainly boutique brands benefiting from the parent companies’ infrastructure.

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