According to real estate experts, the hospitality market is growing in Maryland and across the country. The upswing is driven by a stronger economy, demographic shifts, international demand and changes in consumers needs and expectations.
Improving corporate profits have translated into strong business group demand at hotels. Group bookings, which are defined as blocks of 10 or more rooms, currently make up one-third of hotel occupancy. This drives up the industry's revenue per available room, known as RevPAR. Industry forecasts expect 2015 occupancy rates to hit 64.9 percent, which is the highest since 1984. RevPAR is projected to jump approximately 7.4 percent.
The hotel category showing the greatest amount of growth is upscale select service. These hotels offer business travelers select amenities at an affordable price. Instead of providing an on-site restaurant or other traditional features, many of these properties emphasize perks that appeal to millennials, such as high-speed Internet, mobile check-in service and comfortable common spaces. Online travel agencies, such as Expedia and Priceline, are also driving growth in boutique hotels because many travelers no longer depend on brand recognition when booking rooms. Online travel agencies allow smaller hotels to advertise lifestyle features that appeal to business travelers and woo consumers away from major chains.
According to financial experts, lending levels have also become more aggressive. While loan structures are more conservative than they once were, loans are available for investors with strong business plans. Overall, analysts say the lodging industry is "bullish," and demand is expected to grow.
Maryland investors wishing to participate in the commercial real estate market may benefit by consulting with an attorney. Legal counsel could provide essential guidance regarding purchase agreements, zoning laws, financing and other complex real estate issues.