NATIONAL REPORT - U.S. RevPAR is expected to increase by 1.8% to $99.88 in
2024, driven by ADR growth of 2.6% to $159.92 while occupancy declines 0.8% to
62.5%, according to the latest research from Lodging Analytics Research &
Consulting (LARC).
LARC forecasts 2024 U.S. hotel EBITDA to grow 0.7% and hotel
values to increase 4%. Over the next five years, LARC expects hotel values to
increase 11%.
LARC President Ryan Meliker wrote that an uncertain U.S.
presidential election could lead consumers and businesses alike to curtail
spending during the remainder of 2024. “In fact, since 2000, presidential
election years have seen Real GDP growth decline by 110 basis points on average
versus the prior year,” he said. “In each of the past four presidential
election years, both demand growth and RevPAR growth slowed from the prior
year.”
As such, despite LARC’s baseline view of no near-term U.S.
recession, its outlook for the lodging industry remains somewhat cautious.
Expense pressures will become a substantial factor in identifying winning and losing markets, especially with several major cities embarking on new union negotiations in the coming years.
Ryan Meliker
In 2024, group trends remain solid, helping generate a base
level of demand that will further support pricing power.
Nationally, LARC estimates that the convention center
booking pace is up 4% on a year-over-year basis, following the 15% increase in
2023. However, the booking pace is down 3% in 2025, so they believe there is
risk of modest group headwinds next year.
Corporate transient demand trends are modestly positive,
LARC said, supported by growing corporate profits, stock prices and limited
(very limited in some markets) improvements in office utilization.
Additionally, foreign inbound travel to the U.S. was still
16% below 2019 levels in 2023, providing an opportunity for ample recovery in
2024. In fact, momentum in foreign inbound travel remained strong in early
2024, with YTD April levels just 9% below 2019 levels and up 15% year-over-year.
Unfortunately, trends in U.S. outbound international travel also remain strong,
with YTD April levels 20% above 2019 levels and up 11% year-over-year.
As such, while U.S. outbound international travel
comparisons will be much easier as we progress through 2024, trends are not
encouraging.
LARC said that not every market will benefit from foreign
inbound travel recovery. Not even every gateway-oriented market will benefit. “Every
market has experienced a different level of recovery of foreign travel and
understanding these nuanced details is critical to understanding which markets
will have tailwinds from inbound foreign travel and which ones will not,” Meliker
said.
Generally, LARC expects markets with outsized exposure to
corporate transient, group, and inbound foreign travel recovery to be the outperformers,
while markets with the greatest exposure to domestic leisure demand and those
underperforming from a group pace perspective to be the laggards.
Expense pressures will become a substantial factor in
identifying winning and losing markets, especially with several major cities
embarking on new union negotiations in the coming years, Meliker continued. “Wage
and expense growth and their strain on margin growth materially shapes our
views on markets that are best and worst for investment today,” he said.