STR and Tourism Economics lifted year-over-year growth projections for average daily rate (ADR) and revenue per available room (RevPAR) in their final US hotel forecast revision of 2023.
For 2023, growth in RevPAR was raised by 0.3 percentage point, due to an 0.6 percentage point lift in ADR growth. Recent RevPAR trends demonstrate that rate continues to be the primary driver of performance. Occupancy was downgraded slightly (by 0.2 percentage point). For 2024, the growth projections for each of the key performance metrics remained flat from the previous forecast due to long-term average trends beginning to stabilize.
The research now projects that year-over-year results for 2023 will be: occupancy up 0.6%, ADR up 4.2% and RevPAR up 4.8%. The projections for 2024 are: occupancy up 1%, ADR up 3% and RevPAR up 4.1%. The forecast also sees demand and inflation-adjusted ADR reaching pre-pandemic levels in 2024.
Amanda Hite, president of STR, said the latest projections reflect the continued buoyancy of travelers, as room rates outperformed the previous forecast, which built in a mild recession.
The latest economic outlook, said Hite, calls for a stalling economy, with growth well below the levels seen toward the end of the pandemic. Despite the potential dip, she said, STR sees strong traveler fundamentals, including low unemployment among college-educated individuals, an increased volume of households above $100,000 in income, a rise in real personal disposable income, and a somewhat stable corporate environment.
Aran Ryan, director of industry studies at Tourism Economics, said decelerating factors, including higher interest rates, more restrictive lending, tighter fiscal policy and weakened household finances will lead consumers to rein in spending and firms to cut back on hiring and investment, likely causing the economy to skirt recession. Travel sector improvements, including stronger group activity and returning international visitors, he said, will help offset economic factors, supporting still-solid RevPAR gains.
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