CBRE HOTELS RECENTLY reduced U.S. hotel forecast as lodging demand dips amid soft leisure travel and slower corporate profit growth. The upcoming election in November and other economic factors led to the revisions.
The research group now projects a 1.2 percent RevPAR increase for 2024, down from 2 percent in May. However, it expects a 2 percent RevPAR growth in the second half of 2024, up from 0.5 percent in the first half, driven by international tourism and election events.
Lodging industry performance is closely linked to economic strength, with GDP growth generally correlating with RevPAR growth, CBRE said in a statement. The company forecasts 2.3 percent GDP growth and 3.2 percent average inflation for 2024.
“We expect low single-digit RevPAR growth over the near-term as election-related events, growth in inbound international travel and an anticipated lower interest rate environment should support hotel demand,” said Rachael Rothman, CBRE’s head of hotel research and data analytics. “Challenges including weakening consumer spending and increased competition from short-term rentals, cruise lines and other lodging alternatives pose downside risks.”
CBRE remains optimistic that RevPAR will reach a record $100.54 this year, 114.5 percent of 2019 pre-pandemic levels, the statement said. This forecast is based on a 1.1 percent ADR growth and a 10-basis point increase in occupancy.
“Following stronger-than-expected GDP growth in the second quarter, CBRE anticipates a slowdown in economic growth in the second half of 2024 and into 2025,” said Michael Nhu, CBRE’s senior economist and head of global hotels forecasting. “If interest rate cuts do not stimulate growth and the economy continues to weaken, we may see a decline in RevPAR.”
According to CBRE, despite potential challenges, travel demand remains strong, with record year-to-date TSA throughput in the U.S. at nearly 549 million passengers, up 5.4 percent year-over-year.
The research firm expects rising global wealth and limited supply growth to support lodging fundamentals long-term, forecasting compound annual supply growth of under 1 percent over the next three years due to high financing and construction costs.
In May, CBRE forecasted 2 percent RevPAR growth for U.S. hotels in the second half of 2024, down from 3 percent estimated in February. The company expected stronger growth in the latter half of the year, driven by international tourists, holiday travel and limited supply growth.
