A new forecast from CBRE (NYSE: CBRE) is predicting a greater vibrancy for the US hotel industry in the fourth quarter following a subdued third quarter.
CBRE is predicting a 0.5% increase in revenue per available room (RevPAR) growth for 2024, down from the previously estimated 1.2% in August. This revision reflects a 40-basis point (bps) decrease in expected occupancy compared to the prior forecast, with occupancy anticipated to decline by 30 bps year-over-year. Furthermore, CBRE is forecasting the average daily rate (ADR) to increase by 0.7%, a reduction of 40 bps from earlier projections.
Hotel demand declined 0.1% year-over-year in the third quarter amid a 0.6% increase in supply, resulting in an approximately 0.8% decline in occupancy. Modest 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.
“US hotels performance was softer-than-expected during the summer months, partly due to Americans traveling overseas in record numbers. At the same time, the slow recovery in inbound international travel has created an imbalance in U.S. leisure demand,” said Rachael Rothman, head of hotel research and data analytics for CBRE. “Despite this, continued improvements in group and business travel served as relative bright spots in the third quarter.”
Furthermore, CBRE forecasts a compound annual growth in supply of 1% over the next five years, below 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.
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