Following fourth-quarter U.S. hotel industry gains, CBRE Hotels Research has raised its 2023 revenue forecast, especially in the first quarter, the company announced.
CBRE’s revised 2023 forecast now predicts revenue per available room will reach $97.46, up $0.46 from its previous forecast, announced in November, and up 5.8 percent year over year. CBRE and Kalibri Labs project Q4 2022 RevPAR will top 2019 levels by 12 percent and incrementally grow each quarter through 2024.
Most 2023 RevPAR growth will occur in the first quarter, according to CBRE, which now calls for 16.2 percent year-over-year first-quarter RevPAR growth, “followed by increases in the 1.5 percent to 4.5 percent range over the balance of the year.”
“The easing of travel restrictions in Japan and China, combined with continued improvements in group and independent business travel, should drive RevPAR to record levels in 2023 under our base-case scenario,” CBRE head of hotel research and data analytics Rachael Rothman said in the report.
What also will drive RevPAR growth, according to CBRE, is a “modest” supply landscape.
Also, “the positive revision is predicated on a roughly 30-basis-point increase in expected occupancy compared to the previous forecast,” according to CBRE. And while overall “nominal” RevPAR and average daily rate have recovered to pre-pandemic levels, according to CBRE, occupancy is expected to recover in 2025.
U.S. occupancy in 2022 recovered to 95 percent of 2019 levels, according to CBRE, which projects it will recover to 97 percent in 2023. Occupancy will inch closer to full recovery at 98 percent in 2024, according to CBRE’s forecast, and will reach 100 percent by 2025.
The company reported no change to the average daily rate forecast of $150.21, announced in the November report.
Despite concerns surrounding inflation and the possibility of a recession, CBRE did not indicate any major impact on the U.S. hotel industry beside the potential slowing of supply growth due to increased interest rates.
“The combination of inflationary pressures and higher interest rates are leading to slower hotel supply growth, and further strengthening the pricing power of existing hotels,” CBRE global hotels economist Michael Nhu said in the report.
