Dive Brief:
- In its latest U.S. Hospitality Directions report, professional services company PwC forecasted that ADR and RevPAR will increase through 2024, up 1.2% and 2.2%, respectively.
- Despite “contracted” hotel demand in the first quarter of the year, PwC predicted demand growth will resume in Q2, resulting in 63.6% occupancy for 2024, up slightly from its November forecast.
- PwC maintains its November outlook that economic headwinds and geopolitical tensions, as well as changing traveler behavior, will impact hotel performance in 2024 and beyond. Despite those factors, “marginal growth” in domestic hotel occupancy, room rates and RevPAR is expected in 2025, according to the company.
Dive Insight:
As the year progresses, U.S. hotel ADR will increase, albeit at a decelerating rate, while RevPAR moderates, PwC forecasted in its May U.S. Hospitality Directions report.
The company’s outlook for both ADR and RevPAR in 2024 has declined from November, when PwC predicted ADR would grow 2.4% in 2024 and RevPAR would rise 2.7% year over year.
PwC maintains that “continued economic uncertainty and geopolitical tensions” are expected to impact domestic hotel performance through 2025. Last year, the company said these factors would have a “downstream impact” on hotel performance.
Warren Marr, U.S. hospitality and leisure managing director at PwC, said in this month’s report that the upcoming presidential election will also impact hotels for the remainder of the year.
“Since our last issue of Hospitality Directions US in November, we've seen two additional quarters of decline in hotel occupancies, for a total of four, but expect to see a gradual rebound [in] the balance of this year and into next, off of easier comps,” Marr said in a statement.
Earlier this month, CBRE Head of Hotel Research and Data Analytics Rachael Rothman forecasted that “election-related events, such as political party conventions,” will drive “modest” RevPAR growth over the next several quarters.
CBRE predicted in a May outlook that RevPAR will grow by 3% for the remainder of the year. An uptick in international visitors this year will also drive those results, Rothman said.
PwC, on the other hand, forecasts that outbound international leisure travel will continue to outpace inbound for the remainder of 2024 and into 2025, “given the relative strength of the dollar.”
The company noted, though, that individual business travel and group demand have continued to improve.
In the fourth quarter of 2023, group business fully recovered to pre-pandemic levels in 20 U.S. markets, including Las Vegas, Phoenix and San Diego, according to Knowland and Amadeus’ Hospitality Group and Business Performance Index.
