- In a November report, commercial real estate services company CBRE outlined its performance predictions for the U.S. hospitality market in 2024. CBRE forecasts that RevPAR will increase 3% year over year in 2024.
- The company also predicts year-over-year growth for hotel occupancy and ADR in 2024, with occupancy improving by 40 basis points and ADR increasing 2.3%.
- CBRE’s market performance predictions are based on improving inbound international travel and the moderation of hotel sector-specific headwinds, the company said. The firm’s forecast tracks with professional services company PwC’s 2024 outlook for the U.S. hospitality industry.
Hotel performance growth in 2024 will be influenced by changing travel demand and other economic factors, CBRE’s Head of Hotel Research & Data Analytics Rachael Rothman said in the report.
“U.S. hotel operators faced stiff headwinds to demand and pricing power over the summer due to the number of Americans who elected to vacation overseas, go on cruises or stay in short-term rentals or other alternative forms of lodging,” Rothman said. “We expect RevPAR trends to improve modestly as we head into 2024, as these headwinds ease and the number of inbound international travelers further recovers.”
At the end of the third quarter, the hotel sector was still feeling the impacts of what CBRE called a “summer slowdown,” brought on by significant outbound international travel.
Demand declined for the second consecutive quarter in Q3, and ADR growth was the slowest since post-pandemic recovery began in the first half of 2021, CBRE said. RevPAR growth similarly declined in the quarter, and occupancy at all hotel location types were below 2019 levels.
But Michael Nhu, senior economist and CBRE’s head of global hotels forecasting, said he feels confident about a rebound in the coming year. “We are optimistic that the eventual return of more than 4.7 inbound international travelers will boost occupancy and pricing power back toward their historical trend lines,” he said.
In a separate November report, PwC forecasted that hotel performance growth will continue to decline in the fourth quarter of 2023 and into 2024 due to economic headwinds, geopolitical tensions and changing traveler behavior.
However, the company expects a gradual rebound in hotel occupancy rates to start in the second quarter of 2024, along with RevPAR growth once again exceeding PCE inflation.
PwC predicted similar RevPAR (2.7%) and ADR (2.4%) growth rates for 2024.