Headwinds and Tailwinds both\r\n to be felt for US hotel industry in 2017.\r\n \r\n2017 will prove to be an\r\n uneven investment landscape for hotel owners. Headwinds are sure to be felt on\r\n new construction and the cost and availability of debt capital. However, the\r\n investment environment, coupled with steady operating performance in most\r\n markets, will continue to drive the transaction market with about the same\r\n transaction volume as 2016, but well below the peak of 2015.\r\n \r\nOffshore investors have\r\n largely picked up the slack of domestic REIT’s on major assets, while US\r\n Investors continue to focus on yield. To date loan maturities have not been an\r\n issue or fueled distressed sales. However, in 2017 some $100 billion of CMBS\r\n debt will be maturing, and it is estimated that 20 to 40 percent of that will\r\n not be able to be simply refinanced due to new CMBS regulations and\r\n constricting debt capital availability. Those assets will either need to be\r\n sold, or restructured, and paves the way for new entrants, such as debt funds\r\n and private equity investors to step into structured deals.\r\n \r\nNew supply coupled with flat\r\n to declining Revpar in some markets will create distress for some assets. We\r\n believe that will most likely be felt by older assets who have not kept up on\r\n their PIPs, or those that have less productive brands and aging physical\r\n plants. New supply is a zero-sum game in many markets with demand growth not on\r\n pace to fill every room, but to go to hotels that can offer the best value\r\n proposition. Markets such as Houston, New York, Miami, Chicago, Nashville and\r\n Denver are vulnerable, while markets such as Washington DC, San Francisco and\r\n other California markets may see a bump.\r\n \r\nIt is a good time to assess\r\n investment, hold vs sell and finance options as we move into extra innings on\r\n this cycle. No one trend prevails across the country, as this is a market\r\n specific business that is fluid and ever changing. Smart hotel owners tend to\r\n do well by adjusting their investment strategies to plan for those changing conditions.