Hotel demand and ADR in the U.S. will be close to full recovery on a nominal basis in 2022, according to the upgraded forecast released by STR and Tourism Economics at the 43rdAnnual NYU International Hospitality Industry Investment Conference. RevPAR on a nominal basis is expected to fully recover in 2023.
“ADR has risen more rapidly than we expected — in some cases, that rise was due to strong demand confronting capacity constraints, which enabled solid revenue management, while in other cases, the rise was more influenced by inflation,” said STR’s President Amanda Hite. “When adjusted for inflation, RevPAR is further off the pace and will likely remain below 2019 levels until at least 2025. Other than the first quarter of 2021, demand has mostly adhered to the forecast with strong leisure travel, slowly improving group business and an expected progressive increase in international arrivals next year.”
Although recovery is progressing robustly, there are bound to be obstacles along the way, Hite said, adding that cost of labor is adding pressure on the bottom line, which is a contributing factor for many hotels driving rate.
According to the analysis, occupancy is projected to reach 57.1% and 63.4% in 2021 and 2022 respectively (with occupancy touching 44% in 2020). While ADR was US$103 in 2020, it is expected to rise to US$123 in 2021 and US$130 in 2022. RevPAR was US$45 in 2020 and is projected to touch US$70 in 2021 and US$82 in 2022. RevPAR compared to 2019 was -47% in 2020 and is expected to improve to -19% and -4% in 2021 and 2022, respectively.
“Travel activity entered the fall with strong momentum. With improving public health conditions and sustained economic recovery, additional business and group travelers are expected to join leisure travelers, supporting further gains next year,” said Aran Ryan, Tourism Economics director. “The demand recovery, coupled with successful revenue management, has supported resilient hotel pricing, helping shorten the time it will take to recover 2019 revenue levels.”