Strong group and international travel demand will drive domestic hotel performance growth in 2024, resulting in positive investment fundamentals, hospitality-focused investment firm Newbond Holdings predicts.
Ian Gaum, partner at the New York City-headquartered firm, told Hotel Dive he expects “broad-based and healthy RevPAR growth in 2024” as well as occupancy “closer to pre-pandemic levels” bolstered by strong transient and group demand.
“Primary major urban markets” such as Boston, New York City and Washington, D.C., Gaum said, are benefitting from a rapid recovery of group and business demand and will continue to do so into 2024.
Growing group demand
Despite decreased demand post-pandemic due to slower-to-recover convention and citywide event calendars, office occupancies and business travel, major urban markets are “now benefitting from a more rapid recovery in these areas and should continue to outperform in the coming year,” Gaum said.
This is the case in Dallas, where business travel is fueling a visitor boom, according to local hospitality experts, including Brian Nordahl, EVP and Texas region leader for the CBRE Hotels Institutional Group. Nordahl previously told Hotel Dive that Dallas is experiencing a resurgence of business travel driven in part by several major corporate office relocations.
Additionally, Visit Dallas’ President and CEO Craig Davis told Hotel Dive in November that the city’s hotel revenue growth is in large part driven by the recovery of meetings and events.
In October, Dallas had the largest total RevPAR growth of any other U.S. market, according to a CoStar report. The report also found that New York City led other markets in gross operating profit per available room that month, bolstered by increased group demand.
International visitation
In addition to recovering business and group travel, U.S. hotels will also benefit from heightened international visitors in 2024, Gaum forecasted.
CBRE shared a similar prediction in its U.S. Real Estate Market Outlook 2024, saying Los Angeles’ hotel industry, in particular, will see more visitors from Asia and a boost from the end of the Hollywood entertainment strikes. CBRE, though, anticipates that U.S. hotel performance growth will be less robust throughout the year, as a result of competition from alternative lodging sources and a slower economy.
Across secondary urban markets like Nashville, Tennessee; Tampa, Florida; and Denver, Gaum predicts strong performance growth as a result of the “strength of migration trends, institutional investment and other prominent leisure and commercial demand generators.”
Investment outlook
U.S. hotel performance growth will create an ideal environment for investment in 2024, Gaum noted, though this won’t be without challenges.
“Our conversations with partners, lenders, brokers and peers suggest that investors are still eager, and capital is actively looking to invest in hotels, but higher interest rates and slower growth have given investors pause,” he said, adding that loan maturities, deferred brand property improvement plans, fund expirations, performance improvement and rightsized expectations should “lead to a more normalized transaction environment over the next couple of years.”
Going into 2024, Newbond Holdings is particularly focused on upper upscale and luxury hotel investments in major urban and resort markets, Gaum shared. The firm’s strategy aligns with others in the burgeoning luxury and lifestyle space.
