Dive Brief:
- Following a “weaker than expected” first quarter, commercial real estate services company CBRE forecasts U.S. RevPAR growth will accelerate in the second half of 2024, according to an outlook published last week.
- CBRE predicts that RevPAR will grow by 3% for the remainder of the year, the outlook detailed.
- Improving travel fundamentals and economic factors including GDP growth, which typically has a “strong correlation” with RevPAR growth, will bolster U.S. RevPAR growth throughout the year, according to CBRE.
Dive Insight:
Despite RevPAR declines in the first quarter of 2024, CBRE has increased its growth outlook for the remainder of the year, claiming international tourists and holiday travel will drive results.
RevPAR declined 2.1% year over year in the first quarter of 2024, according to CBRE’s U.S. Quarterly Real Estate Analysis published earlier this month. The company attributed the decline in part to the Easter holiday, which historically slows business travel, falling in Q1 rather than Q2.
In its quarterly analysis, CBRE forecasted inbound travel will increase and “boost hotel occupancies as the summer travel season begins in Q2.”
CBRE Head of Global Hotels Forecasting Michael Nhu, though, noted in the outlook that travel will be challenged by “softer demand, stickier inflation and high interest rates.”
“People have already spent a significant portion of their pandemic-era savings, and on top of that, the lingering inflationary pressures are putting a strain on discretionary spending, especially for more price-sensitive consumers,” Nhu said.
In addition to an uptick in international visitors, “election-related events, such as political party conventions,” will drive “modest” RevPAR growth over the next several quarters, according to CBRE Head of Hotel Research and Data Analytics Rachael Rothman. In Milwaukee, where the Republican National Convention will be hosted in July, hotels are already near full capacity for the days surrounding the event, according to local news channel WISN 12.
The company predicts “muted supply growth” of just under 1% in the medium term — a result of still-elevated financing and construction costs — will also contribute to RevPAR growth this year.
The performance of the lodging industry is “closely tied to the strength of the economy,” so RevPAR growth will closely track 2.3% GDP growth, CBRE predicted in the outlook.
In January, STR President Amanda Hite similarly predicted that solid travel fundamentals, particularly heightened group business demand, would drive hotel performance growth through 2024.
Correction: A previous version of this article misstated CBRE's RevPAR growth forecast. It is 3% for the remainder of the year.
