NATIONAL REPORT – After most 2026 U.S. hotel forecasts were
downgraded late last year comes a bullish report from Truist Securities
projecting mid- and upper-end RevPAR growth of +2%-4%, raised from +1%-3%
previously.
Truist analysts, led by C. Patrick Scholes, added that they
continue to see limited-service at +0.5% to +2.5%. “We see these rates of
growth better than the approx. +1%-1.5% that most industry forecasters and Wall
Street consensus are currently expecting,” Scholes wrote late last week.
Truist cited high-level macroeconomic drivers in 2026 for
its upgraded forecast, primarily U.S. Real GDP growth, which is forecast to
rise to 2.3% from 1.8% in 2025, supported by relief from tax changes, Fed rate
cuts towards 3%, greater stability on tariffs, and ongoing AI- and tech-driven
capital spending. They did hedge, however, stating “significant uncertainty exists
as to what the White House may surprise with for economic and geopolitical
policy.”
Truist said the two-speed economy will persists with higher-income
households benefitting from lower debt-to-income ratios, rising stock prices,
and home appreciation. Lower-income households face slower wage growth,
depleted savings, and persistent inflation pressures.
However, a temporary tailwind will exists as Americans
should see an aggregate $158 billion boost in tax refunds when filing 2025
returns in early 2026 – larger than the second round of COVID stimulus checks
in December 2020, according to Truist.
Another tailwind to growth, according to Truist, will come
from the “perfect storm” of favorable holiday shifts and other “knowns” such as the World Cup and 250th anniversary celebration.
They also believe international in-bound travel demand,
while not necessarily a tailwind in 2026, should not be a headwind after
February like it was in 2025. Government travel demand, while not necessarily a
tailwind in 2026, likely not an additional leg-down headwind in 2026.
Truist said the transient customer segment will likely be
the “strongest” grower in 2026 whereas the group customer will be the weakest
customer. At the moment, transient customer RevPAR looks to be up low-to-mid
single digits for 2026 and reflecting the continuation of bifurcation/k-shaped
trends noted previously, the upper-end will be closer to up mid-single digits
year-over-year with the more mass-market customer closer to up low-single
digits.
While Truist said it is observing 2026 group pace currently
tracking up mid-to-high single digits, if elevated attrition trends do not
subside actual group revenue growth in 2026 will up be far less than
high-single digits. More specifically, they see group occupancy down low-single
digits year-over-year in 2026 with ADRs up low-single digits.
It forecasts luxury properties will be the strongest growers
for the first three quarters and limited-service the strongest in 4Q due to
easy government shut-down comps.
It further expects individual business and leisure at the
mid-to-higher-end of the above ranges and group at the lower-end.
New York will be a top performer, while
Washington, D.C., could be the weakest.