Lodging Analytics Research &
Consulting (LARC) has updated its U.S. lodging industry forecast, moderating
its 2024 RevPAR growth outlook to 2.6% year-over-year ($100.50), fueled by a
3.1% increase in ADR to $160.50 and 0.5% decrease in occupancy to 62.6%.
Generally, LARC expects markets
with outsized exposure to corporate transient, group and inbound foreign travel
recovery to outperform, while markets with the greatest exposure to domestic
leisure demand and those underperforming from a group pace perspective to lag.
LARC anticipates hotel capitalization
rates to stabilize, financing costs to moderate and transaction volumes to
rebound. Expense pressures will become a substantial factor in identifying
markets that are winners and losers, especially with several major cities
embarking on new union negotiations in the coming years. “Wage and expense
growth and their strain on margin growth materially shapes our views on markets
that are best and worst for investment today,” LARC wrote.
Based on current macroeconomic
conditions as described Moody’s, LARC also predicts for 2024 that hotel EBITDA will
grow 3.1% and hotel values to increase 4.9%. Over the next five years, LARC
expects hotel values to increase 9%, or at a 1.7% CAGR.
“Ultimately, our 2024 view for
supply and demand both moderated, driving our occupancy forecast lower,” LARC
wrote. “Our outlook for ADR slightly improved, which combined with our reduced
occupancy growth outlook, drives a 1.0% decrease to our 2024 RevPAR outlook.
However, as the reduction was entirely fueled by occupancy, our hotel EBITDA
levels increased slightly. Negative revisions to our hotel EBITDA forecast
beyond 2024, along with revisions to the outlook for base rates led our hotel
value outlook slightly lower for 2024.”
LARC also listed below best and
worst performing markets for 2024 based on its forecasts.
Its top markets for RevPAR growth
include San Jose, Seattle, San Francisco, Honolulu and New Orleans. Its bottom
Markets for RevPAR growth are Omaha, Kauai, St. Petersburg, Portland (Maine)
and Palm Springs.
Looking at the next five years,
LARC’s top markets for RevPAR growth are Maui, Portland (Oregon), Raleigh, Las
Vegas and Miami. Bottom markets for RevPAR growth are Kansas City, Cincinnati,
Omaha, Boston and Dayton.
Top markets for value change over
the next five years are Las Vegas, Los Angeles, Seattle, Charlotte and Orlando.
Bottom markets for value change are Boston, Chicago, Austin, San Diego and
Philadelphia.