CBRE lowers 2023 RevPAR growth forecast for U.S.

CBRE has lowered its 2023 RevPAR growth forecast in the U.S. from 6% to 4.6% due to a weaker-than-expected second quarter.

CBRE’s positive revision for 2023 has resulted in a marginally lower outlook for 2024.

In its latest U.S. Hotel State of the Union report, CBRE stated that higher-priced hotels outdid in July. As demand for temporary housing declined after the pandemic, RevPAR patterns in the lower rung have started to see signs of normalization. The most recent pockets of strength are in the higher-priced hotels, the report said.

Hotel chains continued to post growth, while independent hotel companies weighed on overall results. Demand for luxury and upper upscale hotels saw a slight improvement in July.

Two more location types were inflected to RevPAR declines in July. Between June and July, suburban and town location types began to witness negative RevPAR growth, while RevPAR in interstate and resort locations softened further.

Hotel chains continued to post growth, while independent hotel companies weighed on overall results.

Hotel margins and profits stayed under pressure. Overall, profits have been declining for three months due to continued wage growth, up 5.5% in July, a CAGR of 8% since the onset of the pandemic.

The gap between inbound and outbound international travel is a headwind to growth. According to the report, outbound travel has outpaced 2019 levels, with Europe and the Caribbean emerging as the strongest destinations. The recovery of inbound international travel is slow but steady.


The U.S. economy appears to be holding steady and is strong, with the Q2 GDP 2.4% and Q3 estimated to range between 1.6% and 5.9%. Boosted by excess in savings, the summer remained robust for overseas travel and short-term rental demand.

Purchasing power for travelers improved in the second quarter. Consumers have spending power to travel as wage growth has surpassed RevPAR and airfare, the report stated. Recent slips in airfare have resulted in YTD TSA throughput recovering to pre-pandemic levels.

Although consumer sentiment has been improving, it is still below pre-pandemic levels. Consumers spent excess COVID-period savings, but cash remains on hand now.

Despite the macro strength, however, hotel KPIs across the U.S. are weakening. RevPAR in July skipped 1.2% due to occupancy, down by 2.1%, partially offset by a modest increase of ADR, up 1%. Markets in contraction continue to increase.


The early signs of property distress are increasing. Declines in profit are resulting in a rise in delinquencies, from 5.4% to 5.9%. This is expected to be a precursor to a rise in special servicing.

Average hotel CMBS touched a post-pandemic low of 7 originations. The three-month moving average in CMBS hotel originations dropped to 7 from 19 in the previous year. These declines could be due to a hike in interest rates and growing credit spreads in July.