The U.S. hotel average daily rate will exceed 2019 levels by 2024, according to the latest CBRE Hotels Research forecast, which also projects revenue per available room to reach 99 percent of its pre-pandemic level in 2024 and 104 percent in 2025.
ADR growth is expected to lead the RevPAR recovery as the occupancy forecast slightly lags the other key indicators. CBRE projects U.S. hotel occupancy to be 65.7 percent in 2025, about 98 percent of its 2019 level. Since the end of May, occupancy has accounted for more than 70 percent of the RevPAR shortfall versus 2019, according to CBRE.
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"The main reason is because supply growth is still coming through the pipeline," said CBRE Hotels head of hotels and data analytics Rachael Rothman. "Openings happened in late 2019 throughout 2020, and openings are still happening in 2021. These were projects underway as we headed into the pandemic. Those are headwinds to occupancy growth."
CBRE's 2021 supply growth forecast shows 29 of its top 65 markets above the 3.6 percent supply-growth average. Those with the most projected hotel rooms opening include Austin, Charlotte and Nashville.
CBRE also noted that business confidence has improved and suggested that would boost corporate travel as offices reopen and children return to school. Other challenges, however, remain.
"Our perspective is, individual business travelers and conference attendees do want to travel, and as health restrictions ease and vaccines roll out, we have seen an uptick," Rothman said. "The headwind is corporate budgets were set relative to 2020, the bottom in the cycle. Those budgets won't immediately snap back to where they were in 2019."
Rothman added that persistent restrictions on international travel pose another challenge. In 2019, "international travel into the U.S. by flight was about 12 percent of overall flight travel, and think about what that can mean for global gateway markets," she said. "Without the full recovery of international, some markets will lag. But business travel is coming back. It will be easier for people once kids go back to school in the fall. … This hasn't been a fully normal summer. In the fall it might be, and we'll see another higher rebound in business travel."
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