Lodging Analytics Research & Consulting lowered its projection for growth in U.S. hotels' 2024 revenue per available room but noted demand for corporate transient travel is increasing, the hospitality consulting firm noted in a report released Friday.
LARC now projects that 2024 U.S. hotel RevPAR will increase 2.6 year over year, down from its previous forecast, issued in December, of 3.6 percent. The firm projected 2024 occupancy would decline 0.5 percent year over year, compared with its December forecast of an 0.8 percent increase. LARC projected 2024 average daily rate would increase 3.1 percent, after forecasting a 2.8 percent increase in December.
LARC said the lower occupancy and RevPAR projections are driven by what the company foresees as a slowing domestic leisure market, hindered by stubborn inflation, soft consumer confidence, overseas geopolitical conflicts and this year's U.S. presidential election.
"Geopolitical risks related to the conflicts in the Middle East and Ukraine and an uncertain U.S. presidential election are likely to lead consumers and businesses alike to curtail spending in 2024," LARC wrote in its forecast. "In each of the past four presidential election years, both demand growth and RevPAR growth slowed from the prior year."
Still, LARC projects corporate transient business will continue to increase in 2024. LARC president Ryan Meliker in January during the Americas Lodging Investment Summit in Los Angeles said the slower-than-expected return of employees to corporate offices continues to hinder business travel volume, and the company doesn't see that appreciably changing this year.
"As economic growth remains positive, we expect continued gradual improvement in corporate transient demand, however, corporate transient demand growth will be limited by a sluggish return to the office," according to LARC.