Before we complete our business plans for 2018, a review of macroeconomic data is in order. China’s growth might be slowing but we anticipate a fairly steady U.S. economy in 2018. We will likely slow to about a 2 percent GDP growth rate over the next year as this economic recovery reaches the 100 month mark next year.
Unemployment is low, consumer confidence is solid and household spending is strong. Interest rates remain low, business confidence is strong and nothing to derail the economy is imminent. Oil prices have been unusually flat notwithstanding the speed bump caused by Hurricane Harvey.
All of this information bodes well for the hotel market in the U.S. which should lead to our estimate of 3 percent RevPAR growth in 2018. Last year at this time, we projected 4 percent RevPar growth for 2017 and stand by that number. Naturally, the caveat is that unexpected “event” that could stimulate a precipitous decline in demand. We believe that can be averted in 2018 despite the craziness in the Middle East, North Korea’s chest pounding and the turbulent economies abroad.
As we are now nearing the end of summer of 2017, this means budgeting and market planning time is here. While many operators merely look at last year’s numbers to budget and forecast, the only meaningful way to budget is to analyze the market thoroughly. Whether you are opening a new business or getting ready for 2018 budgeting, now is the time to begin the planning process.
The following actions need to be taken:
- Review trend report and competitive set information from STR. This will provide a baseline. Ghost call primary and secondary competitors to obtain price points, features and benefits. Obtain sales collateral and start a competitive information file. The process of “elicitation,” coined by John Nolan in “Uncover Your Competitors’ Top Business Secrets Legally and Quickly-And Protect Your Own” discusses the importance of this area.
