Fourth Quarter 2018: “David” Hotels Continue to Dominate the “Goliaths”
Liu, Crocker H.; Nowak, Adam D.; White, Robert M. Jr
Hotels in gateway cities continue to shine, with prices rising 25 percent year over year, compared to an 8-percent rise for hotels in non-gateway cities. Hotel financial performance is still breakeven, with operating profit similar to a hotel property’s borrowing cost, based on economic value analysis. Year over year, mortgage financing volume for hotels fell, as interest rates on Class A and Class B and C hotel deals have risen. A reading of our tea leaves suggests prices are expected to decline for the “Goliaths,” that is, large hotels, while prices moderate (at best) or decline slightly (at worst) for smaller “David” hotels. This is report number 29 of the index series.
Cornell Hotel Indices; economic value analysis (EVA); hotel prices; hedonic hotel index; gateway cities
Supplemental File: Hotel Valuation Model (HOTVAL). We provide this user friendly hotel valuation model in an excel spreadsheet entitled HOTVAL Toolkit as a complement to this report.
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