STR, Tourism Economics Increase Hotel Growth Projections Slightly

(Illustration courtesy of STR and Tourism Economics)

STR, Hendersonville, Tenn., and Tourism Economics, Wayne, Pa., increased their hotel-sector growth projections–just slightly–in their new joint forecast.

The revised forecast increases hotel average daily rate expectations by 0.1 percentage points to 3.1%, while occupancy and revenue per available room were unchanged from the previous forecast.

For 2025, growth projections for each of the key performance metrics were downgraded because the analysts expect the sector’s long-term trends to begin to stabilize: the forecast expects occupancy to dip 0.1 percentage points, ADR to fall 0.3 percentage points and RevPAR to slip 0.5 percentage points next year.

“U.S. average daily rates and revenue per available room reached record highs in 2023 with solid travel fundamentals and a big year for group business underpinning performance,” STR President Amanda Hite said. “We expect to see continued growth [in 2024] as fundamentals remain more favorable for the travel economy. The indicator that is especially important is the low unemployment rate among college-educated individuals, those most likely to travel for business and leisure.”

Aran Ryan, director of industry studies at Tourism Economics, noted the economic outlook has improved. “But we still expect a deceleration in economic growth, characterized by softer labor markets and business sector caution,” he said. “Modest lodging demand growth will be supported by household prioritization of travel, a continued rebuilding of business travel and group events and a rebound in international visitation.”