NATIONAL REPORT – CBRE is reducing its forecast for U.S. hotel
performance this year, as lodging demand softens due to weaker-than-expected
leisure travel and slowing corporate profit growth.
CBRE now projects a 1.2% increase in revenue per available
room (RevPAR) growth for 2024, down from the 2.0% estimated in May 2024.
Nevertheless, CBRE anticipates 2% year-over-year growth in RevPAR in the second
half of 2024, up from 0.5% year-over-year growth in the first half, driven by
international tourism and election-related events.
CBRE forecasts GDP growth of 2.3% and average inflation of
3.2% in 2024. The performance of the lodging industry is closely tied to the
strength of the economy, as there is typically a strong correlation between GDP
and RevPAR growth.
“We expect low single-digit RevPAR growth over the near-term
as election-related events, growth in inbound international travel, and an
anticipated lower interest rate environment should support hotel demand,” said Rachel
Rothman, CBRE’s head of Hotel Research & Data Analytics. “Challenges
including weakening consumer spending and increased competition from short-term
rentals, cruise lines and other lodging alternatives pose downside risks."
CBRE remains optimistic that RevPAR will achieve a nominal record of $100.54
this year, representing 114.5% of pre-pandemic levels in 2019. This outlook is
based on projected average daily rate (ADR) growth of 1.1% and a 10-basis point
increase in occupancy.
“Following stronger-than-expected GDP growth in the second
quarter, CBRE anticipates a slowdown in economic growth in the second half of
2024 and into 2025,” said Michael Nhu, senior economist and CBRE’s head of
Global Hotels Forecasting. “If interest rate cuts do not stimulate growth and
the economy continues to weaken, we may see a decline in RevPAR.”
Despite these potential challenges, demand for travel
remains strong with record year-to-date Transportation Security Administration throughput
in the U.S. of nearly 549 million passengers, up 5.4% year-over-year. CBRE
expects increasing global wealth and muted supply growth to support lodging
fundamentals over the longer term. CBRE forecasts compound annual growth in
supply of under 1% over the next three years, as elevated financing and
construction costs temper construction activity.