Dane Bowler
Value, hedge fund analyst, REITs, long/short equity

Fiduciary Discipline At Hersha Hospitality Sets Them Apart

The Hotel Environment

Thus far, hotel REITs have had a blockbuster fundamental performance in 2014, particularly in the 2nd quarter. 3 powerful fundamental forces have propelled hotels to success.

  1. Low supply: created by the financial crisis and sustained by memories of the demise of many hotels over the past 15 years.
  2. Pent up demand: businesses and individuals seem to be spending the cash saved in previously foregone travels. Demand per room has increased inelastically, affording ADR to rise along with occupancy.
  3. Cyclical increase in demand: Business group travel is back in addition to the business transient and leisure segments.

Despite the strong tailwinds, the next few quarters are a fairly dangerous time for hotel REITs. As RevPAR is beating the...

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