Average U.S. daily hotel rates in 2023 trended higher than projected, according to STR and Tourism Economics, which on Monday increased its growth forecast for 2023 U.S. revenue per available room while slightly downgrading occupancy projections.
For 2023, STR and TE raised their RevPAR projection by 0.3 percentage points from its previous forecast, issued in August, due to a "lift in ADR growth," according to STR.
The companies held their forecast for 2024 steady from their most recent outlook.
"Our latest projections reflect the continued buoyancy of travelers, as room rates outperformed our previous forecast, which built in a mild recession," STR president Amanda Hite said in a statement.
STR and TE now project full-year 2023 RevPAR of $97.84, up 4.8 percent year over year—up 0.3 percentage points from the previous forecast's 4.5 percent. The companies project 2023 ADR of $155.47, up 4.2 percent year over year, and a 0.6 percentage-point increase from the previous forecast.
"Travel sector improvements, including stronger group activity and returning international visitors, will help offset economic factors, supporting still-solid RevPAR gains," TE director of industry studies Aran Ryan said in a statement. Economic factors that could deter growth include tighter fiscal policies and higher interest rates, according to Ryan.
While still projected to increase year over year, U.S. hotel occupancy for 2023 was downgraded slightly from STR and TE's previous forecast, and now is forecast to be 62.9 percent, up 0.6 percent year over year. This is 0.2 percentage points lower than their previous forecast.
2024 Outlook
Looking at 2024, "each of the key performance metrics remained flat from the previous forecast due to the above long-term average trends beginning to stabilize," according to STR.
For 2024, STR and TE project ADR to increase 3 percent year over year to $160.16, and RevPAR to increase 4.1 percent to $101.82. The companies forecast occupancy to increase 1 percentage point year over year to 63.6 percent.
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