08 Jul2013

Industry Outlook (Teague Hunter, Hunter Hotel Advisors)

Interest rates are on the top of everyone's mind - is the party over or is this just a bump in the road?  Should we act now before the rates go up further or hold on to see what happens? Especially with the recent stock market jitters, Hunter has fielded these questions from owners in all segments of the market.

Chairman Bernanke's recent announcement that the improving economy will eventually result in reduced government stimulus has pushed interest rates up roughly 100 basis points.   Yet, the Fed has not actually made a move, so the question is when will their rhetoric turn into action.  

When will the economy recover to the point that we no longer need the Fed's support and how will that affect rates?  We all know that fundamentally the historically low interest rates had to go up, so now do we need to step back and redefine our definition of a low interest rate?

A rate of 5.5% is still 50 basis points less than interest rates at the peak of the last cycle. Though the economy is steadily recovering, we know that, unfortunately, rates must rise eventually. As a result, we will continue to carefully analyze the market's every move in order to stay one step ahead of the next jump. 

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