NASHVILLE – STR and Tourism Economics downgraded the growth
rate in the final U.S. hotel forecast revision of 2024.
For 2024, projected gains in ADR and RevPAR were each downgraded, -0.5 percentage points to +1.5% and -0.6 percentage points to +1.4%, respectively.
Occupancy for the year was lowered 0.1 ppts
to 62.9%, after the previous forecast projected the metric to remain steady
from 2023.
For 2025, the occupancy growth projection
was downgraded 0.4 ppts, and the forecast for ADR and RevPAR increases were lowered
to +1.6% and +1.8%, respectively.
“The outlook for 2025 remains somewhat in flux, with
positive sentiment potentially offset by the higher cost of living,” said
Amanda Hite, STR president. “Based on current economic conditions, higher-end
hotels will continue to drive industry performance. The change in the presidential
administration is anticipated to yield stronger economic conditions at first,
which is not yet reflected in the data.”
“Looking ahead to next year, the economic drivers are
supportive of growth in travel activity. Consumer spending and business
investment are expected to expand, helping support additional gains in business
and group travel demand. Growth in international visitation also represents a
tailwind for 2025,” said Aran Ryan, director of industry studies at Tourism
Economics. “The forecast was prepared pre-election and assumed economic
conditions consistent with political status quo. There is the potential that
the Trump administration will pursue looser fiscal policy and provide a
temporary boost to the economy, before offsetting effects such as tariffs and
immigration act to moderately slow growth.”
“Annual GOP and EBITDA margins remain unchanged from the
previous forecast, both expected to improve slightly year over year,” Hite said.
“For 2025, higher growth is projected across both metrics due to lower labor
costs, with inflation-adjusted GOP forecasted to inch closer to 2019 levels.”