Following recent industry overviews and downgraded revenue projections in major hotel companies' latest earnings reports, a study from CBRE Hotels serves as the latest confirmation that the U.S. hospitality sector is headed for a slowdown.
In the latest quarterly edition of CBRE's Hotel Horizons, based on data through June, the hospitality advisory company forecasts a deceleration in U.S. lodging performance during the final six months of 2019. After increasing 2.1 percent year over year for the first half of the year, demand growth will slow to 1.4 percent year over year for the balance of 2019. The report attributes that slowdown largely to lagging economic growth; CBRE estimated GDP will grow 1.9 percent during the second half of 2019, half the pace of growth during the first six months of the year.
As a result of the slowdown in demand growth, CBRE forecasts U.S. occupancy to decline 0.2 percent from 2018 to 2019. However, the deceleration won't affect room rates until next year, according to the advisory, which predicted that the annual increase in average daily rate will remain steady at 1.1 percent, the same rate it projected in June. For 2019 overall, CBRE now projects revenue per available room will increase just 0.9 percent, 110 basis points below the forecast from the previous report.
A rise in hotel openings also will put downward pressure on room rates, CBRE said. The advisory forecasts supply to grow 2.1 percent in 2020, higher than the long-run average of 1.8 percent. That supply increase will drive a 0.8 percent decline in occupancy for the year. CBRE now forecasts RevPAR to grow 1.2 percent in 2020, also a downward adjustment from June's projection.