Dive Brief:
- CBRE reduced its forecast for U.S. hotel performance for 2024, citing softening lodging demand from “weaker-than-expected leisure travel and slowing corporate profit growth,” according to an outlook published last week.
- CBRE now projects that U.S. RevPAR will grow 1.2% year over year in 2024, down from the 2% the company estimated in May.
- The company predicts that RevPAR growth will be stronger in the second half of 2024 compared to the first, but several potential challenges “pose downside risks,” according to CBRE Head of Hotel Research and Data Analytics Rachael Rothman.
Dive Insight:
CBRE forecasts that RevPAR will grow 2% year over year in the second half of 2024, up from 0.5% year-over-year growth in the first half, according to the outlook.
Near-term low single-digit RevPAR growth will be driven by “election-related events, growth in inbound international travel, and an anticipated lower interest rate environment” supporting hotel demand, Rothman said in a statement.
Challenges like weakening consumer spending, though, could threaten hotels, she said.
Middle-income travelers are currently spending less on trips and shortening their stays at hotels, a recent Morning Consult report found. And in a 2024 outlook published last week, STR President Amanda Hite noted that midscale and economy hotels are continuing to “feel the effect of fewer lower-income travelers.”
STR and Tourism Economics maintained their 2024 U.S. hotel performance outlook at midyear, forecasting that RevPAR growth will be 2% year over year.
Increased competition from short-term rentals, cruise lines and other lodging alternatives could also pose potential risk to hotels, CBRE’s Rothman noted. As could a slowdown in economic growth, according to CBRE Head of Global Hotels Forecasting Michael Nhu.
Despite “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,” Nhu said. “If interest rate cuts do not stimulate growth and the economy continues to weaken, we may see a decline in RevPAR.”
CBRE projects GDP growth of 2.3% in 2024, according to the outlook. There is “typically a strong correlation between GDP and RevPAR growth,” according to CBRE.
