Revenue per available room (RevPAR) remains on track for full recovery this year on a nominal basis but not until 2025 when adjusted for inflation.
STR and Tourism Economics adjusted occupancy downward but lifted projections once again for average daily rate (ADR) in the revised U.S. hotel forecast just presented at the 14th Annual Hotel Data Conference. Revenue per available room (RevPAR) remains on track for full recovery this year on a nominal basis but not until 2025 when adjusted for inflation.
The updated forecast adds a little more than $2 to the ADR projection for both 2022 and 2023. Occupancy was lowered by less than a percentage point for each year.
“Leisure demand, as expected, hit significant levels this summer, and what we are hearing in earnings calls and from our industry colleagues would indicate that group business travel should be much more aligned with pre-pandemic patterns in the fall and winter,” said Amanda Hite, STR president. “Our downward adjustment to occupancy was pretty much focused on a slowdown in the economy segment, which is likely due to a mix of leisure travelers wanting higher levels of accommodation and budget travelers being priced out of the market. Inflation remains the key consideration in our ADR discussions, but hotels continue to display strong pricing power. There are reasons to be concerned about the economy, continued challenges around labor and business transient still lagging, but the hotel industry is on solid footing. U.S. profitability hit a 32-month high in June, and margins have remained strong although some reduction is likely with higher staffing levels, wages, and costs.”
“The baseline Oxford Economics outlook anticipates slow economic growth in 2023 but not a recession, as a combination of cooling aggregate demand and easing supply constraints will help slow inflation,” said Aran Ryan, director of lodging analytics at Tourism Economics. “In this context, with leisure demand supported by solid household finances and an ongoing recovery of group and business travel, lodging performance gains are expected to continue, though at a much slower pace than experienced this year.”
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.
She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
