STR and Tourism Economics have updated their 2023 U.S. hotel forecast by lifting rate expectations and slightly lowering occupancy projections, the companies announced Monday during the 45th Annual NYU International Hospitality Industry Investment Conference in New York.
The updated 2023 U.S. hotel forecast increased the projected average daily rate 1.5 percent from the previous projection, updated in January. STR and TE now expect full-year 2023 ADR to reach $154.28, up from $151.10 in its previous update and up 3.5 percent from 2022. Projected revenue per available room increased by 1.3 percent from the previous projection to $97.95 for 2023, which is up nearly 5 percent from 2022.
As for occupancy, the updated projection reflects about a 0.2 percent decrease from the previous forecast to 63.5 percent. Occupancy totaled 62.7 percent in 2022.
“Recent stress in the banking system and tighter lending standards will add to inflation pressures and produce a relatively mild recession in the second half of 2023,” Tourism Economics director of industry studies Aran Ryan said in a statement.
To that end, STR and TE project limited hotel profit growth due to growing operation expenses, according to the report.
“A halting economy will limit gains in lodging demand, though we continue to anticipate returning group and business activity, international travel, and consumers’ desire for travel will sustain modest growth in room nights sold,” Ryan added.
While labor pressures will impact rising costs and narrow profit margins, STR is overall “very optimistic,” STR president Amanda Hite said during the NYU International Hospitality Industry Investment Conference.
“Things are slowing in many industries and consumers are pulling back in some places, but travel is not where they are pulling back,” Hite added.
As for 2024, the companies project full-year occupancy at 64.4 percent and ADR at $159.03. RevPAR is forecast to reach $102.49 in 2024, which is 1.8 percentage points in above 2019 levels in “real” dollars, as described by STR to be “when adjusted for inflation,” according to the report. The report projects 2024 RevPAR to be the first time “real” RevPAR will surpass 2019 levels.