STR and Tourism Economics adjusted occupancy downward but lifted projections once again for average daily rate (ADR) in the revised US hotel forecast just presented at the 14th Annual Hotel Data Conference. Revenue per available room (RevPAR) remains on track for full recovery this year on a nominal basis but not until 2025 when adjusted for inflation.
The updated forecast adds a little more than $2 to the ADR projection for both 2022 and 2023. Occupancy was lowered by less than a percentage point for each year.
“Leisure demand, as expected, hit significant levels this summer, and what we are hearing in earnings calls and from our industry colleagues would indicate that group business travel should be much more aligned with pre-pandemic patterns in the fall and winter,” said Amanda Hite, STR President. “Our downward adjustment to occupancy was pretty much focused on a slowdown in the economy segment, which is likely due to a mix of leisure travelers wanting higher levels of accommodation and budget travelers being priced out of the market. Inflation remains the key consideration in our ADR discussions, but hotels continue to display strong pricing power. There are reasons to be concerned about the economy, continued challenges around labor and transient business still lagging, but the hotel industry is on solid footing. US profitability hit a 32-month high in June, and margins have remained strong although some reduction is likely with higher staffing levels, wages, and costs.”
“The baseline Oxford Economics outlook anticipates slow economic growth in 2023 but not a recession, as a combination of cooling aggregate demand and easing supply constraints will help slow inflation,” said Aran Ryan, director of lodging analytics at Tourism Economics. “In this context, with leisure demand supported by solid household finances and an ongoing recovery of group and business travel, lodging performance gains are expected to continue, although at a much slower pace than experienced this year.”
STR provides premium data benchmarking, analytics and marketplace insights for the global hospitality industry. Founded in 1985, STR maintains a presence in 15 countries with a corporate North American headquarters in Hendersonville, Tennessee, an international headquarters in London, and an Asia Pacific headquarters in Singapore. STR was acquired in October 2019 by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces. For more information, please visit str.com and costargroup.com.