Although the price of large hotels has declined, small hotels continue to experience positive momentum, based on our Standardized Unexpected Price (SUP) metric. Hotel investment based on operating performance is back in the red, with signals that investors are experiencing negative leverage, since the borrowing cost of debt now exceeds the return on invested capital. Our financing, risk, and early warning indicators all continue to suggest that hotel prices should start to level off or decline. This is report number 17 of the index series.
Liu, C. H., Nowak, A. D., & White, R. M. (2016). Fourth Quarter 2015: Large hotels have lost momentum— small hotels still going strong [Electronic article]. Center for Real Estate and Finance Reports Hotel Indices, 5(1), 1-22.