CBRE Hotels Research on Thursday softened its full-year 2025
projections for U.S. hotel occupancy, average daily rate and revenue per
available room, largely due to a weaker macroeconomic forecast, the company
announced.
CBRE still expects "increased
group and business travel" in 2025 from prior-year levels but now projects
the U.S. gross domestic product will increase 1.4 percent year over year,
compared with the 2.4 percent growth projection it used in its prior
forecast in February. It also projects a 2.9 percent average inflation
rate, up from the 2.5 percent figure it used previously.
CBRE now projects full-year 2025 U.S. RevPAR to increase 1.3
percent year over year, compared with its prior forecast of 2 percent. The
company projects ADR to increase 1.2 percent (compared with 1.6 percent in the
February forecast) and occupancy to increase 0.14 of a percentage point
(compared with 0.23 of a percentage point previously).
Despite the forecast of slower economic growth and higher
inflation, "growth will be strong enough to support the lodging industry’s
performance," according to CBRE.
"Economic and geopolitical uncertainties aside, several
factors will drive RevPAR growth in 2025," said, CBRE head of hotel
research and data analytics Rachael Rothman said in a statement. "These
include an uptick in group and business travel, along with a weaker U.S. dollar
and lower airfares, which may encourage domestic travelers to stay closer to
home while boosting inbound international visitation to the U.S."
These trends should benefit urban hotels in particular,
according to Rothman, along with "regional resorts and drive-to
destinations."
CBRE also projected supply growth to average 0.8 percent
annually over the next four years, which it said is half the long-term average,
which should offer hoteliers a degree of pricing power.
RELATED: CBRE's
February 2025 forecast