Slowing RevPAR growth impacts brand selection: CBRE

NATIONAL REPORT – A slowdown in RevPAR growth, fueled in part by increased competition, makes brand selection by developers even more critical, according to a new Hotel Brand Performance 2024 report from CBRE.

The report provides an analysis of the industry's performance from 2013 to 2023. Among the highlights:

• The U.S. hotel industry is experiencing a proliferation of brands, growing from an average of 13 brands per family in 2013 to 25 in 2023.
• RevPAR growth has slowed dropping to 1.5% between 2018 and 2023 from 3% annually between 2013 and 2018. This trend suggests increasing competition from alternative lodging options rather than just a delayed pandemic recovery.
• With only 30% of brands examined achieving above-average RevPAR growth over the past five years, selecting the right brand has become increasingly important. The range of performance among brands within the same chain scale can be vast, impacting profitability dramatically.
• High levels of inflation have suppressed RevPAR growth, with only 3% of brands achieving growth above inflation between 2018 and 2023. This indicates a challenging environment for maintaining profitability.
• Upper-midscale chains have outperformed other chain scales. Free breakfast, strong brand recognition, no resort fees and the ability of guests who trade both up and down have increased the appeal of select-service hotels.
• Over the past 10 years, the strongest-performing brand family had RevPAR growth of 2.7% versus 0.3% for the weakest-performing brand family. On a cumulative basis, the strongest brand family outperformed by nearly 27% between 2013 and 2023. Since these two brand families had RevPAR less than $6 apart, CBRE would not attribute the RevPAR growth difference to a variance in chain scale.