Despite facing economic challenges and geopolitical tensions, the U.S. hotel industry is projected to see marginal performance gains through the remainder of 2024 and into 2025, according to the latest U.S. Hospitality Directions report from PwC. This forecast anticipates growth in key metrics such as Average Daily Rates (ADR) and Revenue Per Available Room (RevPAR).
PwC's report forecasts a 1.2% year-over-year increase in ADR and a 2.2% rise in RevPAR for 2024. This comes despite a contraction in hotel demand during the first quarter. However, demand is expected to pick up in the second quarter, leading to a projected occupancy rate of 63.6% for the year. These figures reflect a slight adjustment from PwC’s November predictions, which had estimated higher growth rates of 2.4% for ADR and 2.7% for RevPAR.
The ongoing economic uncertainty and geopolitical tensions are anticipated to continue impacting hotel performance through 2025. PwC's U.S. hospitality and leisure managing director, Warren Marr, emphasized that the upcoming presidential election would further influence hotel performance this year. “Since our last issue of Hospitality Directions US in November, we’ve seen two additional quarters of decline in hotel occupancies, for a total of four, but expect to see a gradual rebound [in] the balance of this year and into next, off of easier comps,” Marr noted.
Election-related events, including political party conventions, are expected to drive modest RevPAR growth over the next several quarters, according to CBRE Head of Hotel Research and Data Analytics Rachael Rothman. CBRE predicts a 3% growth in RevPAR for the rest of the year, bolstered by an increase in international visitors.
Conversely, PwC forecasts that outbound international leisure travel will continue to surpass inbound travel for the rest of 2024 and into 2025, fueled by the strong U.S. dollar. Nonetheless, individual business travel and group demand have shown signs of improvement. Notably, group business travel fully recovered to pre-pandemic levels in 20 U.S. markets by the fourth quarter of 2023, including key locations like Las Vegas, Phoenix, and San Diego.
As the U.S. hotel industry navigates through a landscape marked by economic and geopolitical uncertainties, it is set to achieve marginal gains in occupancy, ADR, and RevPAR. These developments underline the industry's resilience and capacity to adapt in the face of ongoing challenges. Stakeholders will need to remain vigilant and responsive to these dynamics to harness growth opportunities while mitigating potential risks.
Comments