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Forecast: U.S. hotel demand and ADR will near full recovery in 2022

The Baird/STR Hotel Stock Index jumped 6.8% in October to a level of 5,520. Year to date through the first 10 months of 2021, the stock index was up 20.7%. 

 

NEW YORK — U.S. hotel demand as well as average daily rate (ADR) on a nominal basis will near full recovery in 2022, according to the upgraded forecast just released by STR and Tourism Economics at the 43rd Annual NYU International Hospitality Industry Investment Conference. Additionally, revenue per available room (RevPAR) on a nominal basis is projected to be fully recovered in 2023.

We have essentially moved up the top-line recovery timeline by one year, with the caveat that improved RevPAR projections are largely due to ADR,” said Amanda Hite, STR’s president. “ADR has risen more rapidly than we expected—in some cases, that rise was due to strong demand confronting capacity constraints, which enabled solid revenue management, while in other cases, the rise was more influenced by inflation. When adjusted for inflation, RevPAR is further off the pace and will likely remain below 2019 levels until at least 2025. Other than the first quarter of 2021, demand has mostly adhered to the forecast with strong leisure travel, slowly improving group business and an expected progressive increase in international arrivals next year. Of course, these are all national projections of top-line performance. Recovery is not playing out the same across the marketplace, and as noted in our latest monthly P&L release, the cost of labor is adding pressure on the bottom line, which is a contributing factor to many hotels driving rate. Recovery is progressing at a solid rate no doubt, but there will still be plenty of ups and downs along the way.” 

Travel activity entered the fall with strong momentum. With improving public health conditions and sustained economic recovery, additional business and group travelers are expected to join leisure travelers, supporting further gains next year,” said Aran Ryan, Tourism Economics director. “The demand recovery, coupled with successful revenue management, has supported resilient hotel pricing, helping shorten the time it will take to recover 2019 revenue levels.”

Baird/STR Hotel Stock Index jumped 6.8% in October
The Baird/STR Hotel Stock Index jumped 6.8% in October to a level of 5,520. Year to date through the first 10 months of 2021, the stock index was up 20.7%. 

Hotel stocks increased for the second straight month, but performance was led by the hotel brands once again,” said Michael Bellisario, senior hotel research analyst and director at Baird. “The hotel REITs were marginally higher in October, while the hotel brands were the absolute and relative winners. Delta variant concerns are in the rearview mirror now, and investors are looking forward to the recovery continuing in 2022, particularly in some of the harder hit segments, markets, and regions that are poised to rebound strongly.” 

As businesses bring their workers back to the office, weekday occupancies are steadily improving, adding to the already strong room demand from weekend leisure travelers,” said Amanda Hite, STR’s president. “The industry has also seen a lift from improved group demand, which has been above 1 million each week since the start of ‘conference season.’ Industry stakeholders, especially in major cities, are also drawing optimism from the border opening to international travelers next week, although we expect a more delayed impact for hotels. Overall, industry recovery remains solid with weekly ups and downs continuing as well as labor costs pressuring profitability into at least the winter.” 

In October, the Baird/STR Hotel Stock Index fell behind both the S&P 500 (+6.9%) and the MSCI US REIT Index (+7.6%).  

The Hotel Brand sub-index rose 9.0% from September to 9,894, while the Hotel REIT sub-index increased 0.5% to 1,240.

Tatiana Rokou

Tatiana is the news coordinator for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). Her role includes monitoring the hundreds of news sources of TravelDailyNews Media Network and skimming the most important according to our strategy.

She holds a Bachelor's degree in Communication & Mass Media from Panteion University of Political & Social Studies of Athens and she has been editor and editor-in-chief in various economic magazines and newspapers.

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