NATIONAL REPORT – Among the more bullish forecasts, Lodging
Analytics Research & Consulting (LARC) suggests 2025 U.S. RevPAR will
increase by 2.7% to $102.29, driven by ADR growth of 2.7% to $162.85 while
occupancy remains at 62.8%.
For 2024, LARC forecasts U.S. hotel EBITDA to decline 1.6%,
with slight margin erosion, and hotel values to increase 5%. For 2025, LARC
forecasts U.S. hotel EBITDA to increase 1.1%, with slight margin erosion, and hotel
values to increase 3%. Over the next five years, LARC expects hotel values to
increase 12%.
LARC points to improving confidence in leisure demand bottoming
out and growth ready to resume in 2025, which translates into higher occupancy
levels but modestly lower ADR growth.
“We continue to expect there to be U.S. lodging markets that
materially outperform as well as those that underperform national averages,”
said LARC President and Co-founder Ryan Meliker. “Over the medium-to-long term,
we expect markets with outsized exposure to leisure transient and group to
outperform. However, in the immediate term, those with outsized exposure to
inbound foreign travel and continued corporate transient recovery should shine
most.”
Among LARC’s predictions:
2025 top markets for RevPAR growth: Maui, San Jose, Seattle,
Palm Beach, Fort Lauderdale
2025 bottom markets for RevPAR growth: Kauai, Indianapolis,
Ann Arbor, Houston, Milwaukee
2023-2028 top markets for RevPAR growth: Maui, Raleigh, Palm
Beach, New Orleans, San Jose
2023-2028 bottom markets for RevPAR growth: Cincinnati,
Kansas City, Austin, Louisville, Savannah
2023-20238 top markets for value change: Puerto Rico, Las
Vegas, New Orleans, Seattle, Orlando
2023-2028 bottom markets for value change: St. Louis,
Boston, Chicago, Austin, San Diego
It added that expense pressures will become a substantial
factor in identifying markets that are winners and losers, especially with
several major cities engaged in new collective bargaining negotiations. In Los
Angeles, the hotel union reached an agreement with hotel owners/operators
earlier this year that incorporates a wage increase of 40% to 50% over the next
4.5 years and a reset back to pre-pandemic staffing levels. Not only will this
have an impact on the Los Angeles hotel market, LARC opined, but it is likely
to be the barometer used across other collective bargaining agreements during
the next several years, including Boston (agreement expired), Baltimore
(agreement expired), San Francisco (agreement expired August 2024), San Jose
(agreement expired August 2024), Seattle (agreement expired August 2024), New
York (2026 renewal) and others.
LARC expects nonunion hotels to keep pace with wage growth
at union properties across these markets, though many are already paying wages
above union-mandated levels. “Layering in added political risks like the Safe
Hotels Act in New York City, which could be duplicated in other major markets,
wage and expense growth is likely to be a bigger component of value change than
top-line performance across many markets,” Meliker said. “As such, wage and
expense growth and their strain on margin growth materially shapes our views on
markets that are best and worst for investment today.”
LARC also anticipates financing costs to stabilize and
transaction volumes to rebound.