A weaker-than-expected first quarter and sticky inflation have caused CBRE to lower its RevPAR growth projection from 3 per cent to 2 per cent for 2024.
CBRE has downgraded its U.S. RevPAR growth projections for the rest of 2024 following a weaker first quarter than was expected.
CBRE’s latest forecast calls for 2 per cent growth in U.S. RevPAR for 2024 (its original annual projection in February called for 3 per cent growth). The company expects RevPAR to return to positive territory (it was off 2.1 per cent year-over-year in the first quarter), especially in the second half of the year, due to increasing international tourist arrivals and holiday travel, and limited supply growth.
“We anticipate modest growth over the next few quarters, supported by a continued uptick in visitors from overseas and election-related events, such as political party conventions,” says Rachael Rothman, CBRE’s head of hotel research and data analytics.
CBRE now also forecasts GDP growth of 2.3 per cent for the rest of 2024 (it originally projected 1.6 per cent in February) and average inflation of 3.2 per cent (its original projection was 2.5 per cent). The forecast calls for RevPAR to hit a nominal record of $101.20 in 2024, which would be 115 per cent of pre-pandemic levels in 2019. The forecast also calls for ADR growth of 1.7 per cent and occupancy growth of 0.2 per cent.
The CBRE forecast also calls for muted supply growth of just under 1 per cent in 2024 because of the elevated financing and construction costs. Hotel supply is projected to have a compound annual growth rate of 0.9 per cent over the next three years.
Q1 summary
CBRE said a 1.4 per cent year-over-year decrease in U.S. hotel demand and a 0.6 per cent increase in supply led to a 2 per cent drop in occupancy in the first quarter. In addition, ADR declined slightly (-0.1 per cent), which caused RevPAR to decline by 2.1 per cent YOY (see chart).
The drop was caused partially by the timing of the Easter holiday (which fell in the first quarter this year compared to the second quarter last year). CBRE also said hotel demand continues to be pressured by other lodging sources, including short-term rentals and cruise lines.
Hotel industry wage growth in the U.S. also accelerated in the first quarter to 5.5 per cent compared to 4.9 per cent in the fourth quarter of 2023 and outpaced the national average of 4.5 per cent for all industries.
CBRE said half of the top 10 RevPAR growth markets in the U.S. were in smaller secondary metros, with West Coast markets like Seattle and San Jose posting strong year-over-year gains. Baltimore and Long Island, New York, had the largest RevPAR gains in the first quarter (see chart).
In the first quarter, occupancy rates for all U.S. location types were below 2019 levels, with interstate and town locations at 99 per cent of 2019 levels and urban locations at 92 per cent.
The Ontario government has given the green light to Niagara Parks Commission (NPC) to redevelop the Toronto Power Generating Station (TPGS) into a five-star boutique hotel near the brink of Niagara Falls.
Mundi Hotel Enterprises Inc. has added a prominent property to its portfolio with the acquisition of the hotel component in Highline Metrotown, a mixed-use tower in Burnaby, British Columbia.
Taylor Swift’s Eras Tour kicked off its Canadian leg on November 14, 2024, at Toronto’s Rogers Centre, the first of six sold-out performances that will draw tens of thousands of fans nightly.
As 2024 progresses, the Canadian hotel industry is navigating a shifting economic landscape characterized by inflation, fluctuating interest rates, and moderated demand growth. Cushman & Wakefield’s latest report,…
