2022 WAS ONE OF THE BEST YEARS ON RECORD FOR HOSPITALITY SALES…AND THE OUTLOOK FOR 2023 AND BEYOND IS BRIGHT!
The past several years have been unprecedented…marked by the Pandemic, international unrest and a fluctuating financial market. And for good reason, this has caused some pause for many new buyers considering a transition into the hospitality business. But there is some good news on this front, and for those wondering if now remains a good time to make the move…we say “yes it is!”
According to an article published April 3, 2023 by The Center Square (a news outlet launched in 2019 focused on state and local-level government and economic reporting)…Maine hotel tax revenue is forecasted to increase 25.7% in 2023. The organization also anticipates average lodging levels of 63.6% this year, compared to 60.5% in 2019.
That’s not to say there haven’t been challenges for businesses…we all see the help wanted signs everywhere we go…and the hospitality industry has been hit particular hard trying to fill empty positions. But for many business owners, this has created new opportunities and new ways of serving guests, just perhaps with fewer employees. (We will talk more about this in another post).
“The positive trends for hotels within Maine mimic what is taking place across much of the country”, Chip Rogers, president and CEO of AHLA, said in a recent statement. “Hotels are making significant strides toward recovery, supporting millions of good-paying jobs and generating billions in state and local tax revenue in communities across the nation,” Rogers said. “To continue growing, we need to hire more people,” Rogers said. “Fortunately, there’s never been a better time to be a hotel employee, with wages, benefits, flexibility and upward mobility better than ever before.”
CBRE Group, Inc. is a Fortune 500 and S&P 500 company headquartered in Dallas, and is a leading commercial real estate and investment firm. In late Q4 of 2022, CBRE forecasted a full recovery in average daily rates by the end of 2022, and continued demand and revenue growth in 2023 for hospitality.
And specifically, CBRE Hotels Research continues to expect better relative performance in “drive-to leisure destinations”. CBRE also notes, “fall foliage destinations are seeing the largest uplift in search demand: More travelers are packing their hiking shoes and heading to locations known for their vibrant fall colors, especially those in Colorado, Upstate New York, Maine and Kentucky.”
And this is great news for Maine. It’s not just summer months that bring tourists to our state. With a tremendously well-populated customer base, spanning from NJ, NY and all up through New England (and Canada), Maine enjoys a rich pool of potential guests who can drive to many destinations in Maine, in under 6 hours, throughout the year.
And last but not least, let’s talk about the current lending market for commercial loans. While rates have been on the rise, we are beginning to see this trend level off. And buyers do have options. Putting a bit more down on the loan can help offset that additional monthly payment, and sellers are aware that these rising rates are keeping some potential buyers at bay. So there may be room to negotiate the sell price. Either strategy, or a combination of both, can go a long way to bring your debt service within a range that allows for strong profit in a industry that continues to thrive here in Maine.
If you are an investor, entrepreneur, seasoned hospitality professional, or someone looking to make a career/lifestyle change to hospitality, now is a terrific time to seriously consider making your move!
