U.S. Hotel Performance Impacted by Moderate Summer Demand; Growth Forecast to Improve in Q4, says CBRE

U.S. Hotel Performance Impacted by Moderate Summer Demand; Growth Forecast to Improve in Q4, says CBRE | line4k – The Ultimate IPTV Experience – Watch Anytime, Anywhere

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  • U.S. Hotel Performance Impacted by Moderate Summer Demand; Growth Forecast to Improve in Q4, says CBRE – Image Credit Pixabay on Pexels   

Despite a slow summer and a sluggish third quarter, the U.S. hotel industry is predicted to see improved performance in the fourth quarter of 2024 and into 2025, according to the latest forecast by CBRE.

CBRE’s revised forecast anticipates a 0.5% increase in revenue per available room (RevPAR) growth for 2024, a drop from the previous estimate of 1.2%. This adjustment signifies a 40 basis point decrease in expected occupancy compared to the previous forecast, with a predicted year-over-year decline of 30 basis points. The average daily rate (ADR) is projected to rise by 0.7%, a 40 basis point decrease from earlier predictions. RevPAR growth is expected to pick up again from the fourth quarter of 2024, supported by recent interest rate cuts, easing inflation, and positive stock market trends.

Rachael Rothman, Head of Hotel Research & Data Analytics for CBRE, commented that U.S. hotel performance was weaker than expected over the summer, partly due to a significant number of Americans traveling abroad. The slow recovery in international visitors to the U.S. has created an imbalance in domestic leisure demand. However, the continued improvement in group and business travel provided some positives in the third quarter.

In the third quarter of 2024, hotel demand fell by 0.1% compared to the previous year, while supply increased by 0.6%. This resulted in an approximately 0.8% decline in occupancy. The ADR growth of 0.6% fell short of CBRE’s previous expectation of 1.6%, leading to a 0.2% decrease in RevPAR for the quarter.

Michael Nhu, Head of Global Hotels Forecasting for CBRE, stated that despite the disconnect between hotel demand and GDP growth in the third quarter, they anticipate a normalization due to interest rate cuts, lower CPI growth, and improving GDP indicators. These trends are expected to bolster the U.S. hotel market fundamentals, leading to accelerated RevPAR growth into 2025.

Over the next five years, CBRE forecasts a compound annual growth in supply of 1%, lower than the industry’s long-term historical average of 1.6%. The forecast includes GDP growth of 2.6% and average inflation of 2.9% for 2024. With the hotel industry performance closely tied to economic strength, CBRE advises clients to consider various economic and hotel performance scenarios in their planning, given the current macroeconomic and geopolitical uncertainties.

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