Dive Brief:
- STR and Tourism Economics raised their 2023 year-over-year growth projections for ADR by 0.6% and RevPAR by 0.3% but lowered occupancy projections for the year by 0.2%, according to their final U.S. hotel forecast revision of 2023, released Monday.
- STR and TE now anticipate ADR and RevPAR to increase 4.2% and 4.8%, respectively, year over year in 2023. The research companies also anticipate occupancy to grow by 0.6% year over year in 2023, compared to the 0.8% they forecasted in August.
- The companies also provided guidance on 2024 and 2025, predicting that occupancy, ADR and RevPAR will increase both years. RevPAR, though, remains below 2019 levels and will not recover until 2025, the companies predict. STR and TE’s outlook is based on changing traveler behavior and macroeconomic factors.
Dive Insight:
STR’s latest growth projections for 2023 reflect the “continued buoyancy of travelers,” signaled by room rates outperforming the company’s August forecast, STR President Amanda Hite said in the forecast report. “Looking ahead to the new year, we expect to see continued growth in RevPAR,” she added.
STR and TE predict that, in 2024, occupancy will increase 1% year over year, while ADR and RevPAR will grow 3% and 4.1%, respectively. All three performance categories will see growth in 2025 as well, the companies predict, with occupancy up 0.8%, ADR up 3.1% and RevPAR up 4% year over year. RevPAR will fully recover in 2025, according to the forecast report, with levels up 2.3% compared to 2019.
Future revenue growth is bolstered by “strong traveler fundamentals, including low unemployment among college-educated individuals, an increased volume of households above $100k in income, a rise in real personal disposable income, and a somewhat stable corporate environment,” Hite said.
Aran Ryan, director of industry studies at TE, echoed Hite, saying travel sector improvements, including stronger group activity and returning international visitors, will help offset economic factors like higher interest rates and support “still-solid RevPAR gains.”
Earlier this month, in separate U.S. hotel market outlook reports, PwC and CBRE forecasted year-over-year RevPAR growth near 3% in 2024, as well as ADR growth around 2.3% for the same period.
CBRE Head of Hotel Research & Data Analytics Rachael Rothman similarly cited increasing travel demand for anticipated revenue gains, saying, “We expect RevPAR trends to improve modestly as we head into 2024, as [...] the number of inbound international travelers further recovers.”
