STR and Tourism Economics have lowered growth expectations for 2023 and 2024 in their U.S. hotel forecast amid a “period of normalization,” according to STR president Amanda Hite.
STR and TE lowered its expected 2023 year-over-year growth in revenue per available room by 0.5 percentage points and occupancy by 0.6 percentage points compared with its most recent forecast, issued in June.
“We brought down our growth projections with the industry in a period of normalization,” Hite said in a statement, adding that while “conflicting signs of economic slowdown” are affecting the industry, demand in the upper ends of the market prevails.
“Hoteliers remain optimistic, especially those in the middle-to-higher end of the market. A lot of the normalization we have seen in the data supports that optimism with a steady uptick in business travel and continued improvement in the major markets,” Hite said.
However, even with the downgraded RevPAR expectations, “growth remains above the long-term historical average,” the companies said.
The updated U.S. hotel forecast projects 2023 RevPAR of $97.56, up 4.5 percent year over year, and ADR of $154.62, up 3.6 percent—a raised outlook of 0.1 percentage points from STR’s previous forecast. Occupancy in 2023 is projected to be 63.1 percent, up 0.8 percentage points year over year, according to the companies.
Additionally, ADR growth has “moderated” following easing inflation and some signs of record-breaking leisure travel demand waning, according to the companies. With that said, any impact from the “slowdown on lodging demand will be limited, as group and business travel activity rebuilds, international visitors return, and leisure travelers continue to find room in household budgets to prioritize travel,” Tourism Economics director of industry studies Aran Ryan said in the report.
Looking ahead to 2024, STR and TE project RevPAR to be $101.56, up 4.1 percent year over year, and ADR to be $159.33, up 3 percent. The companies forecast 2024 occupancy to be 63.7 percent, up 1 percent.
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