The 2023 U.S. hotel forecast from STR and Tourism Economics was slightly upgraded at the Americas Lodging Investment Summit (ALIS). A subsequent downgrade for 2024 was also made.
This year’s occupancy forecast is 0.1% lower than last year’s, while ADR and RevPAR forecasts are 0.5% and 0.3% higher, respectively. For 2024, occupancy was reduced by 0.3%, while a 0.1% increase in ADR resulted in a 0.4% decrease in RevPAR.
RevPAR, the significant top-line performance metric, made a full recovery in 2022 on a nominal basis, but it will not achieve that status when adjusted for inflation (real) till 2025.
Even if the expected recession is mild, performance growth this year will be remarkable, according to 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 especially important for the upper-tier classes,” Hite said.
Overall, much of the industry is in a solid position to navigate uncertainty; a return to the YOY benchmark is expected as the pandemic calendar comparables are left behind, Hite added.
“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. “We expect lodging demand growth will slow but will remain positive on a YOY basis as group events and international travelers return, and households continue to prioritize leisure travel.”