Lodging Performance Gains Expected to Continue

[Note to our Springwood reader: this is a reprint of an article by Chris Davis in the August 11, 2022 edition of Business Travel News. The original headline of the article was “STR Boosts U.S. Hotel Rate Forecast, Cuts Occupancy.” We’ve bolded what we consider to be key takeaways. Here’s the article:]

Citing still-robust demand but inflationary pressures and a skittish economic outlook, STR and Tourism Economics on Thursday slightly raised their forecast for U.S. hotel rates and revenue per available room but cut projected occupancy levels. 

STR and Tourism Economics now project an average 2022 U.S. daily room rate of $148, up from $145 in their previous forecast, issued in June. The companies also project an occupancy rate of 63 percent, down from 63.4 percent in the prior forecast.

Inflation remains the key consideration in our ADR discussions, but hotels continue to display strong pricing power.”

STR’s Amanda Hite

The companies project 2022 RevPAR of $93, up from $92 in the prior projection. The new figure represents an 8 percent increase from 2019.

STR president Amanda Hite in a statement said the firm cut projected occupancy primarily due to “a slowdown in the economy segment,” citing inflationary pressures on budget leisure consumers and some travelers seeking higher service levels.

As for rate, “Inflation remains the key consideration in our ADR discussions, but hotels continue to display strong pricing power,” according to Hite. “There are reasons to be concerned about the economy, continued challenges around labor and business transient still lagging, but the hotel industry is on solid footing. U.S. 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.”

Tourism Economics parent Oxford Economics “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,” Tourism Economics director of lodging analytics Aran Ryan said in a statement. “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, though at a much slower pace than experienced this year.”

The companies’ new projections for 2023 call for an occupancy level of 64.6 percent, compared with 65.1 percent in the June forecast. They project average daily rate of $152, compared with $150 in the prior forecast. The RevPAR forecast of $98, unchanged since June, represents a 14 percent increase from 2019 levels.

1 Comment

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One response to “Lodging Performance Gains Expected to Continue

  1. David Thoman

    My brother and I own a hotel in Hayward Wisconsin and I live in the York Pennsylvania area and looking to purchase something at here you can call me at 608-558-1365 thank you

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