News
10
www.asianhospitality.com
September 2024 | Issue 229
BRE Hotels recently reduced
its U.S. hotel forecast as
lodging demand dips amid soft
leisure travel and slower corporate
profit growth. The upcoming election
in November and other economic
factors also led to the revisions.
The research group now projects
a 1.2 percent RevPAR increase for
2024, down from 2 percent in May.
However, it expects a 2 percent
RevPAR growth in the second half of
2024, up from 0.5 percent in the first
half, driven by international tourism
and election events.
Lodging industry performance
is closely linked to economic
strength, with GDP growth generally
correlating with RevPAR growth,
CBRE said in a statement. The
company forecasts 2.3 percent GDP
growth and 3.2 percent average inflation
for 2024.
“We expect low single-digit RevPAR
growth over the near-term as election-
related events, growth in inbound
international travel and an anticipated
lower interest rate environment
should support hotel demand,” said
Rachael Rothman, CBRE’s head of hotel
research and data analytics. “Challenges
including weakening consumer
spending and increased competition
from short-term rentals, cruise lines
and other lodging alternatives pose
downside risks.”
CBRE remains optimistic that RevPAR
will reach a record $100.54 this year, 114.5
percent of 2019 pre-pandemic levels, the
statement said. This forecast is based on
a 1.1 percent ADR growth and a 10-basis
point increase in occupancy.
“Following stronger-than-expected
GDP growth in the second quarter,
CBRE anticipates a slowdown in
economic growth in the second half
of 2024 and into 2025,” said Michael
Nhu, CBRE’s senior economist and
head of global hotels forecasting. “If
interest rate cuts do not stimulate
growth and the economy continues
to weaken, we may see a decline in
RevPAR.”
According to CBRE, despite
potential challenges, travel demand
remains strong, with record year-
to-date TSA throughput in the U.S.
at nearly 549 million passengers, up
5.4 percent year-over-year.
The research firm expects
rising global wealth and limited
supply growth to support lodging
fundamentals long-term, forecasting
compound annual supply growth of under
1 percent over the next three years due to
high financing and construction costs.
In May, CBRE forecasted 2 percent
RevPAR growth for U.S. hotels in the
second half of 2024, down from 3 percent
estimated in February. The company
expected stronger growth in the latter
half of the year, driven by international
tourists, holiday travel and limited
supply growth.
CBRE cuts RevPAR growth forecast
to 1.2 percent for 2024
The research group remains optimistic that RevPAR will hit a record $100.54 this year
CBRE Hotels recently reduced its U.S. hotel forecast, projecting
a 1.2 percent RevPAR increase for 2024, down from 2 percent
estimated in May. It expects 2 percent RevPAR growth in the
second half of 2024, up from 0.5 percent in the first half, driven by
international tourism and election events.
TR and Tourism Economics updated
their 2024-25 U.S. hotel forecast, raising
projected occupancy by 0.2 percentage
points and revising the previous forecast of a
year-over-year decline. However, ADR gains
were downgraded by 0.1 percentage points, while
RevPAR remained unchanged at a 2 percent year-
over-year increase.
The occupancy growth projection for 2025 was
also lifted by 0.2 percentage points, while ADR
and RevPAR increases remained at 2 percent and
2.6 percent, respectively, STR and TE said in a
joint statement.
“Midscale and economy hotels are continuing
to feel the effect of fewer lower-income
travelers,” said Amanda Hite, STR’s president.
“On the other hand, high-income households
continue to travel, but domestic levels are
constrained due to an increase in outbound
travel. The stronger dollar continues to pressure
international inbound demand, especially as the
cost-of-living crisis continues in Europe and
airlift rebuilds across Asia Pacific.”
In June, STR and TE significantly downgraded
the 2024-25 U.S. hotel forecast, reflecting lower-
than-expected performance and reduced growth
projections for the year.
“Economic growth is expected to be slower
next year, but with strong household balance
sheets, a gradual upswing expected in business
investment, and moderating inflation, we
anticipate a favorable context for moderate travel
growth, said Aran Ryan, TE’s director of industry
studies.
“Further gains in international inbound
travel, as well as in business and group travel, are
also expected to help support lodging demand
growth next year.”
Hite said annual GOP and EBITDA margins
are forecasted to improve slightly year over
year.
“For 2025, higher growth is expected across
both metrics due to lower labor costs, which are
set to decrease slightly for a majority of the chain
scales,” she said. “Upper midscale chains are still
expected to maintain the lowest labor costs this
year, with 2025 levels forecasted to come in $168
lower than Luxury chains.”
STR, TE project positive growth for U.S. hotels in 2024-25
The 2025 occupancy growth projection was increased by 0.2 percentage points