09
News
www.asianhospitality.com
February 2025 | Issue 233
oStar and Tourism Economics
made minimal adjustments to
their growth forecast in the
first 2025 U.S. hotel forecast, with ADR
and RevPAR gains unchanged at 1.6
percent and 1.8 percent, respectively.
Occupancy for the year was raised by
0.1 ppt to 63.1 percent.
The CoStar and TE joint study was
released at the Americas Lodging
Investment Summit in Los Angeles.
“While business optimism is on the
rise, economic data has not changed
significantly from our previous
forecast,” said Amanda Hite, STR
president. “The stronger performance
seen in the fourth quarter was driven
by one-time factors, including holiday
travel compression and weather-
related events, and does not constitute
a change in trend. Additionally, the
impact of the new administration has
not been factored into the forecast,
as significant policy changes have
yet to be implemented, and any
projected effect of those changes
remains unclear. Thus, our forecast
is relatively unchanged overall with
minor tweaks among the chain
scales. Based on current economic
conditions, we expect higher-end
hotels to continue to drive industry
performance.”
Aran Ryan, TE's director of industry
studies, said 2025 economic conditions
are expected to support travel activity,
including some actions by President
Trump.
“Unemployment is low, inflation is
slowing, consumers are spending -
particularly those in higher income
households, and business investment
activity is solid," Ryan said. "Trump
administration trade and immigration
policy priorities present downside
risks, particularly to inbound travel
(e.g., through trade war responses,
visa impediments, charged rhetoric
and general border and policy
uncertainty)."
Hite said normalized expense
growth and a slight increase in
TRevPAR are expected to drive profits
in 2025.
“Labor costs are forecasted to
stabilize in 2025 as hotels have
adjusted operations to current
labor trends, and these lower labor
margins will allow for slightly better
GOP margins,” she said. “With
continued growth in groups and
business travel, F&B departments
are expected to report some of the
highest growth rates this year. Rooms
and undistributed operating expense
growth will moderate, though utilities
departments will almost certainly see
increases.”
In November, CoStar’s STR and TE
downgraded their 2024 growth rate
forecast for the U.S. hotel industry.
In January, CoStar also reported
that the U.S. hotel industry achieved
record-high ADR and RevPAR in 2024
compared to the previous year, but
growth slowed to its lowest rate since
2020. New York City led the top 25
markets with occupancy up 3.3 percent
to 84.3 percent, according to CoStar's
year-end data.
Occupancy remained flat at 63
percent in 2024 compared to the
previous year, while ADR rose to
$158.67, a modest 1.7 percent increase
from 2023. RevPAR came in at $99.94,
reflecting a 1.8 percent increase over
the prior year.
Markets with the lowest occupancy
in 2024 included St. Louis at 58.1
percent, Minneapolis at 58.7 percent,
and Detroit at 59.1 percent. The top 25
markets recorded higher occupancy
and ADR compared to all other
markets, while markets outside the top
25 experienced a 0.5 percent decline in
occupancy.
CoStar, TE maintain growth
forecast for 2025
Occupancy was increased by 0.1 ppt to 63.1 percent
CoStar and Tourism Economics made minimal adjustments to their 2025 U.S. hotel forecast, with ADR and
RevPAR gains unchanged at 1.6 percent and 1.8 percent, respectively, while occupancy rose by 0.1 ppt to 63.1
percent.