Are US hoteliers headed toward ‘mediocre’ summer?

Truist remains conservative on RevPAR performance in high-rated U.S. resort destinations where it continues to see ADR discounting close to the date of arrival as hoteliers and vacation rental owners try to induce occupancy due to soft bookings. Truist also said for price-sensitive leisure travel, inflation concerns are factoring into vacation decisions (though somewhat offset by easier year-over-year comparisons and Americans’ continued desires for travel experiences) and where it sees “value plays” as appealing alternatives, such as cruising, all-inclusive resorts and vacation ownership.

Within individual business travel, Truist is seeing flattish year-over-year demand with corporate room rate growth strong at up mid-to-high single digits.

Truist is lowering its 2024 RevPAR forecast for U.S. mid- and higher-end hotels by 50 basis points. “As 1Q24 actualized somewhat soft in part from weak near-in bookings and we have not seen any material acceleration in most forward-looking trends since we last published our forecast in March, we are lowering our overall 2024 RevPAR growth forecast to +2-4% year-over-year from the prior +2.5-4.5%,” the report stated.

Truist’s 2Q24 RevPAR forecast of +2-4% is unchanged and is introducing a 3Q24 RevPAR forecast of +1-3% (possibly +0-2%). “Specifically, by customer segment, we see group finishing at or above the high-end of the above ranges (San Francisco market excluded), individual business (corporate stronger than small and mid-sized businesses) at least at the mid-points, and leisure towards the low ends of the ranges,” it wrote. “The quarter-over-quarter deceleration is due primarily from 2Q24 benefiting from the Easter shift and 3Q24 the most leisure-heavy quarter of the year as leisure is currently the weakest of the three main customer segments.”