2023 Hotel Forecast Gets an Upgrade; Dip in 2024 Outlook
(The Manchester Grand Hyatt in San Diego, site of CREF23 Feb. 12-15.)
The occupancy projection for this year came in slightly lower than the previous forecast, by 0.1%, while projections for average daily rate and revenue per available room improved by 0.5% and 0.3%, respectively. For 2024, a 0.3% downgrade in occupancy coupled with a 0.1% lift in ADR meant a RevPAR downgrade of 0.4%.
The report said RevPAR, the key top-line performance metric, was fully recovered in 2022 on a nominal basis but will not achieve that status when adjusted for inflation (real) until 2025.
“Even if the anticipated recession is more on the shallow side, performance growth in 2023 will be pretty remarkable,” said STR President Amanda Hite. “Gains are slowing, however, with inflation rising at a faster rate than ADR. Demand continues to trend at record levels with continued strength in the leisure segment as well as a substantial return in group business. While improving, a deficit persists in business travel – a segment that is especially important for the upper-tier classes. Overall, much of the industry is in a solid position to navigate choppy waters ahead, and we will even see a return to the year-over-year benchmark as the pandemic calendar comparables are behind us.”
“Oxford Economics’ baseline outlook anticipates the economy will experience a mild recession this year, characterized by a peak-to-trough decline in GDP of around 1%, and a roughly one percentage point increase in the unemployment rate,” said Aran Ryan, director of industry studies at Tourism Economics. “In this context, we expect lodging demand growth will slow but remain positive on a year-over-year basis as group events and international travelers return, and households continue to prioritize leisure travel.”