Volatility and uncertainty due to changes since the start of the President Donald Trump administration are among the biggest factors impacting travel and the lodging industry, said Daniel Lesser, co-founder, president and CEO of LW Hospitality Advisors, at Hotec Operations in Orlando earlier this week. While that and several other weaknesses could dampen the industry this year, the industry has numerous strengths on its side, Lesser said.
Pre-inaguaration, the U.S. economy was ‘humming along,” but “volatility and uncertainty has definitely caused a lot of angst —not only the U.S. economy, but the world economy. It’s not good for the economy and its not great for the hotel business,” Lesser said. Consumers have fears about recession, inflation, and what is going on in China, he explained.
“The middle class and below is feeling economic pain…which is not great for the lodging industry and something to keep an eye on,” Lesser said.
Additionally, some Canadians, Europeans and others say they do not want to travel to the U.S., which may be partially counterbalanced by more Americans traveling domestically because they don’t know how they will be treated internationally, according to Lesser.
Another negative impacting hotels is that DOGE has “definitely had an effect on employees traveling. They have been cut back and are not traveling, he noted.
At the same time, a lot of companies are investing in America, and “that’s a real positive thing,” Lesser noted. Plus, U.S. commercial real estate is actually in “pretty good shape.”
While hospitality investment activity has been somewhat muted due to current volatility, there are some transactions occurring and many more significant investments expected this year. “There is a ton of money on the sidelines looking to get deployed. There is refinancing and investment money out there,” Lesser said.
Among the multi-milion dollar transactions that have taken place this year is Ryman’s acquisition of the Phoenix Desert Ridge Resort for $865 milion this week, Lesser said, citing several additional examples.
Investors are buying hotels as an inflation hedge due to the ability to adjust rates daily, unlike office buildings, Lesser noted.
New hotel construction is not as prevalent this year similar to last year, Lesser acknowledged. Hotels in construction increased only 1 percent from 2023 to 2024, while hotels under contract increased 6 percent from 2023 to 2024, he noted. However, “for the right project, you can get construction money.”