CBRE Forecasts Modest Hotel RevPAR Growth
(Image courtesy of pixabay via pexels.com)
CBRE, Dallas, forecasts that hotel revenue per available room will grow modestly this year, driven by the continued outperformance of urban locations as well as a projected rise in demand for drive-to and regional leisure destinations.
CBRE forecasts a 1.3% increase in RevPAR for 2025, with occupancy and average daily rate rising by 14 basis points and 1.2% year-over-year, respectively. This represents slightly softer growth than had been anticipated in CBRE’s February forecast, which projected 2.0% RevPAR growth, based on a 21-basis-point boost in occupancy rates and a 1.6% increase in ADR.
CBRE’s forecast assumes an expected 1.4% increase in GDP growth this year (down from 2.4% annual growth as of the February forecast) and a 2.9% average inflation rate for 2025 (40 basis points higher than anticipated in February). While the economy is expected to grow more slowly, growth will be strong enough to support the lodging industry’s performance.
“Economic and geopolitical uncertainties aside, several factors will drive RevPAR growth in 2025,” said Rachael Rothman, CBRE’s head of hotel research and data analytics. “These include an uptick in group and business travel, along with a weaker U.S. dollar and lower airfares, which may encourage domestic travelers to stay closer to home while boosting inbound international visitation to the U.S.”
Rothman noted these trends will likely particularly benefit urban hotels, regional resorts and drive-to destinations.
Looking ahead, CBRE projects RevPAR growth in the range of 1.0% to 3.0% over the next few years. Several events, including the 2026 FIFA World Cup, the United States’ 250th anniversary in 2026 and the 2028 Summer Olympics should help drive demand. “These developments, coupled with the enduring appeal of national parks, gateway cities and domestic leisure destinations, are expected to sustain growth momentum, barring an unforeseen economic downturn,” the report said.
CBRE said it expects hotel supply growth to average 0.8% annually over the next four years, which is half of the industry’s historical average. “A drop in demand or sharper-than-expected spike in construction costs could cause supply growth to decelerate further,” the report said.
