CBRE Hotels Research on Thursday for the third time this year lowered its projected year-over-year increases for full-year 2024 U.S. average daily rate, occupancy and revenue per available room. Still, CBRE said summertime business travel demand improved in the third quarter, and solid economic conditions could prove a boon in 2025.
CBRE now projects full-year 2024 U.S. RevPAR to increase 0.5 percent year over year, down from the 1.2 percent increase it forecast in August. It projects full-year U.S. occupancy to decrease 0.3 percent year over year, compared with an August forecast of a 0.1 percent increase. ADR is forecast to increase 0.7 percent, compared with a prior projection of a 1.1 percent increase.
CBRE head of hotel research and data analytics Rachael Rothman in a statement said third-quarter U.S. hotel performance was "softer than expected" on softer leisure demand but noted that "continued improvements in group and business travel served as relative bright spots."
The U.S. hotel industry's performance is closely linked to broader economic metrics, according to CBRE, and noted that projections of solid 2025 U.S. gross domestic product growth along with slowing inflation and limited supply growth should boost rate and RevPAR in 2025.
"The breakdown in the historical correlation between hotel demand and GDP growth continued into the third quarter, but we expect a normalization of this relationship due to interest rate cuts, lower CPI growth, and improving GDP indicators," CBRE head of global hotels forecasting Michael Nhu said in a statement. "These trends are forecasted to strengthen the fundamentals of the U.S. hotel market, leading to reaccelerated RevPAR growth heading into 2025."
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