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Where is hospitality construction headed in 2018?

This summer our Orlando factory has been humming with production of bathroom pods bound for hotels throughout the U.S.

Back in the spring, real estate experts predicted 2017 would be a strong year for hospitality construction, with potential declines in 2018. As we move into Q4, let’s take an early look at how the market is shaping up for 2018.

As the old joke goes, ask 10 economists a question and you’ll get 11 opinions. Yet, despite variability in the specific forecasts, the trend shaping up for the coming year is moderate growth compared to 2017.

  • CBRE sums this point up with its prediction from August that, “The U.S. lodging industry will enjoy continued growth in all major metrics in 2018, albeit at a slower pace [than 2017].”

  • AIA chief economist Kermit Baker predicts hotel construction will remain positive – with spending up 2.4% over 2017, compared to 2017’s more robust increase of 6.1% over 2016. For the overall construction market, Baker sees headwinds from the Fed tightening interest rates, higher building materials costs and continuing tight skilled labor supply.

  • FMI forecasts a similar moderation in growth for the coming year, with the value of hotel construction tapering to 4% growth in 2018 versus 6% in 2017.

From our perspective, the 2018 hotel market for pre-fab construction is looking solid, especially as Marriott International’s expanded modular construction initiative translates into orders for product.

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