Anticipating a “mild” recession going into 2023, STR and Tourism Economics in a report released Tuesday project U.S. hotel rates and occupancy next year will decrease slightly year over year, a bit below the companies’ previous forecast.
STR and Tourism Economics predict an average 2023 U.S. daily room rate of $151, down from $152 in their previous forecast, issued in August. The companies now project 2023 revenue per available room to reach $96, down from $98 in their previous forecast, but up 11.6 percent from 2019 levels.
The companies also project a 2023 occupancy rate of 63.8 percent, down from 64.6 percent in the prior forecast. The new projections, less than one percentage point different from the previous forecast, reflect the U.S. hotel industry’s continued “resilience through these tougher times, thus the steadiness of our updated forecast,” Tourism Economics director of industry studies Aran Ryan said in a statement.
Citing an Oxford Economics forecast of “a mild recession in the first half of 2023,” Ryan indicated he expects “weaker economic momentum will temper the travel recovery,” but anticipates “the rebuilding of business travel and the ongoing prioritization of leisure travel to support continued lodging demand growth next year.”
While inflation and “the likely recession” remain a consideration, according to Ryan, the companies predict corporate travel demand will continue in 2023.
“As expected, group business travel has been much more aligned with pre-pandemic patterns, specifically in October when group demand hit a pandemic-era high,” STR president Amanda Hite said in the report. “Leisure travel has maintained its strength since our previous forecast update, and we expect these strong demand trends in both group and leisure to continue through the fourth quarter.”
Staffing and labor concerns will trickle into 2023 as “high levels of hospitality unemployment and more spending on contract labor are pushing labor costs on a per-available-room basis above 2019 levels,” according to Ryan.
The companies project full-year occupancy of 62.7 percent, down from the 63.4 percent forecast in August, with ADR of $148 and RevPAR of $93, each the same as their August projection.
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