Hospitality forecast a mixed bag for NM

A new report on the hospitality industry is projecting good news for the Southwest, but not necessarily for New Mexico.

The 2017 U.S. Hospitality Investment Forecast, an annual report from commercial real estate investment firm Marcus & Millichap, is projecting revenue per hotel room in the Southwest will exceed the national average but that New Mexico should be prepared for a decline.

The forecast points to issues such as hotel stays on government per diem that could restrict room revenue.

Charlie Gray, executive director of the Greater Albuquerque Innkeepers Association, isn’t so sure.

“Historically, because of Los Alamos and Sandia, our number (of people staying in hotels on government per diems) is higher than most other states,” said Gray.

But Gray said that even if government per diem room nights fall, it will be at least partially offset an increase in the per diem rate. Albuquerque’s federal rate, for example, has increased from $89 to $91, he said.

The Marcus & Milllichap report is bullish on the Southwest region, thanks to an improving national economy and other factors.

“Economic growth remains sufficient to generate a 1.7 percent increase in room nights (for the Southwest) this year and raise occupancy to 66.5 percent,” the Marcus & Millichap report states. But the report projects a decline in both of those metrics for New Mexico.

New Mexico Tourism Department Research Director Victoria Gregg told the Journal that the department’s indicators tell a different story. She said both occupancy rates and revenue per available room grew from 2015 to 2016, and that the department is seeing positive numbers from the first quarter of 2017.

The “early numbers, combined with the upward trend in 2016, indicate that room occupancy and revenue continues to show strong growth,” she said.

Gray said the Albuquerque occupancy rate is up 4 percent in the first quarter of 2017 over the same time in 2016, as a strong indicator of the coming year. “I’m cautiously optimistic,” he said. The Marcus & Millichap report also noted some potentially positive news for the state, pointing out that a potential an increase in drilling in the Permian Basin of southeastern New Mexico, where oil companies have made substantial investments over the last year, could lift hotel occupancy rates.

The report also points out that proposed budget increases in infrastructure and defense could help New Mexico but that there is still uncertainty as to how federal budget changes may affect the industry as a whole.