NATIONAL REPORT – CBRE now forecasts a 0.5% increase in RevPAR
growth for 2024 in the U.S., down from the previously estimated 1.2% in August.
This revision reflects a 40-basis point (bps) decrease in expected occupancy
compared to the prior forecast, with occupancy anticipated to decline by 30 bps
year-over-year. ADR is expected to increase by 0.7%, a reduction of 40 bps from
earlier projections.
RevPAR growth is expected to reaccelerate beginning in Q4
2024, supported by recent interest rate cuts, easing inflation, and rising
stock market trends.
CBRE forecasts a compound annual growth in supply of 1% over
the next five years, below the industry’s long-term historical average of 1.6%.
The forecast includes GDP growth of 2.6% and average inflation of 2.9% for
2024.
The lodging industry’s performance is closely linked to
economic strength, as there is typically a strong correlation between GDP
growth and RevPAR. Given current macroeconomic and geopolitical uncertainties,
CBRE advises clients to evaluate and incorporate various economic and hotel
performance scenarios in their models based on their risk tolerance and
probability weightings.
“U.S. hotels performance was softer-than-expected during the
summer months, partly due to Americans traveling overseas in record numbers. At
the same time, the slow recovery in inbound international travel has created an
imbalance in U.S. leisure demand,” said Rachel Rothman, head of Hotel Research
& Data Analytics for CBRE. “Despite this, continued improvements in group
and business travel served as relative bright spots in the third quarter.”
In Q3 2024, hotel demand declined 0.1% year-over-year, coupled with a 0.6%
increase in supply, resulting in an approximately 0.8% decline in occupancy.
Modest ADR growth of 0.6% fell short of CBRE’s previous expectation of 1.6%,
leading to a 0.2% decrease in RevPAR for the quarter.
“The breakdown in the historical correlation between hotel
demand and GDP growth continued into the third quarter, but we expect a
normalization of this relationship due to interest rate cuts, lower CPI growth,
and improving GDP indicators,” said Michael Nhu, head of Global Hotels
Forecasting for CBRE. “These trends are forecasted to strengthen the
fundamentals of the U.S. hotel market, leading to reaccelerated RevPAR growth
heading into 2025.”