Capital expenditures for the U.S. lodging industry is forecasted to exceed the prior record level spent in 2013, according to a report from New York University’s Tisch Center for Hospitality. The industry is expected to reach a new record level of $6 billion in spending—an increase of seven percent.
There were decreases of 40 percent in 2009 and an additional 18 percent decline in 2010 in response to decreasing occupancy, ADR, RevPAR, and profits in 2009. Expenditures have increased every year since 2010.
2014 expenditures reflect deferred items from 2009 to 2012 and meeting new brand standards, ranging from new or enhanced in-room equipment to redesigned lobbies. Occupancy will return to close to 2007 levels and ADR will show the largest increase since 2007.
Although total 2013 U.S. capital expenditures were a record, the nominal amount per available room was slightly less than in 2008. The 2014 amount will be a record for both real and nominal values.
In this recent cycle, many brands and management companies waived requirements involving capital expenditures to help owners through the period of decreased financial performance from 2009 to 2011. Even as RevPAR and profits recovered, many owners were still experiencing difficulty from decreased profits or losses from prior years. This flexibility has changed, and brands and management companies are now requiring these improvements to maintain quality and brand standards.
