RevPAR in May was driven by a 2.4% increase in ADR and 0.9%
growth in occupancy, which the report said was likely driven by outperformance
in the New York City and Las Vegas markets and a shift in San Francisco
convention timing. The report said all location types posted positive RevPAR in
May for the first time in nine months.
The CBRE report also said that 74% of 65 hotel markets
studied posted RevPAR growth in May, the highest percentage of markets with
positive growth since January. The report also said that despite 1.4% total
revenue growth in March and April combined, an 80-basis point contraction in
GOP margins led to a 0.8% decrease in profit dollars. CBRE said insurance and
property tax increases could also present additional challenges for hotel
EBITDA growth.
State of the economy
CBRE said that despite the U.S. economy’s first-quarter GDP
missing expectations, it is revising its 2024 GDP growth by 10 bps to 2.4%
because of the strength of growth in the second quarter. The report said
inflation will continue to ease, a trend that started in the second quarter,
and CBRE has revised its inflation projection down 10 bps to 3%.
The report said credit spreads contracted 97 bps year over
year, which caused CMBS rates to drop to their lowest levels since February
2023. At the same time, CMBS loan issuance tripled from $0.6 billion in May
2023 to $1.8 billion in May 2024. While the average loan count has remained
steady, the average loan size more than doubled year over year from $20.4
million to $55.2 million in May.
The reports also said employment growth has slowed to 0.2%
while wage growth has remained roughly 4%, which means consumer leverage
remains slightly below pre-COVID levels but is increasing. Personal savings
remains below average.
Other travel data
CBRE said short-term rentals continued to take share from
hotels in May, with demand growing 13% compared with a 1.5% increase in hotel
demand. While RevPAR growth for short-term rentals was positive (+4.2%),
occupancy has dropped below pre-COVID levels as supply growth has increased.
While outbound international travel increased to 118% of
2019 levels in May, inbound travel still lagged at 86%. The report said travel
from Japan and China appears to be range-bound, remaining around 50% since
August 2023. CBRE said travel trends on the East and West Coasts remained
steady in May, and it still expects summer travel to Europe to remain strong.
The report also noted that TSA throughput
reached 107% of 2019 levels in June, and airport RevPAR grew 4.4% in May,
marking the second straight month of growth.