PwC outlook: Economic headwinds to impact U.S. hotel performance this year and into 2024

While hotels in the U.S. have continued to outperform market expectations, worries of recession, the recent bank failures and liquidity crisis are likely to weaken hotel performance for the rest of this year and into 2024, a recent study has revealed.  

According to PwC’s U.S. Hospitality Directions May 2023 study, hotels in the U.S. surpassed Q1 2019 RevPAR levels by 13% based on data from STR. Room rates continue to be this performance recovery’s main driver. While occupancy in Q1 2023 was still down 2.1 points from the same period in 2019, ADR improved by 17%.  

Leisure travel continues to see a steady performance, despite slowing growth levels. Individual business travel and group business have slowly re-emerged, contributing a major share to future growth expectations.  

PwC expects annual occupancy for hotels in the country this year to see a marginal rise less than the November outlook, increasing to 63.4%. With slowing growth in occupancies in the rest of the year, ADR is projected to increase by 4.1% this year, with resultant RevPAR increasing by 5.5%, approximately 114% of pre-pandemic figures on a nominal dollar basis. 


  • Since PwC’s November 2022 outlook, the Fed’s monetary policy has resulted in steadily rising interest rates and the unexpected failure of many big regional banks, collectively resulting in limited availability of debt. This tightening credit market has caused a sharp slowing of construction starts for new hotels.  
  • Individual business travel and groups will offset a weakening leisure demand for the rest of this year and into 2024, with outbound international leisure travel outperforming inbound, given the relative dollar strength. With flattening occupancy levels in 2024, growth will come almost entirely from ADR, with an anticipated YOY rise of 3.5% in RevPAR, approximately 118% of pre-pandemic figures. 
  • The major risks to this outlook include the pace and magnitude of changes in the macroeconomic environment, continued elevated vacancy rates in office spaces across the nation and rising geopolitical tensions.