CBRE, the commercial real estate services and investment firm, is now projecting a 1.2% increase in hotel revenue per available room (RevPAR) growth for 2024, down from the 2% estimated in May 2024. Nevertheless, CBRE anticipates 2% year-over-year growth in RevPAR in the second half of 2024, up from 0.5% year-over-year growth in the first half, driven by international tourism and election-related events.
CBRE forecasts GDP growth of 2.3% and average inflation of 3.2% in 2024. The performance of the lodging industry is closely tied to the strength of the economy, according to the company, as there is typically a strong correlation between GDP and RevPAR growth.
Rachael Rothman, CBRE’s head of hotels research and data analytics, said CBRE expects low-single-digit RevPAR growth over the near term as election-related events, growth in inbound international travel and an anticipated lower interest rate environment should support hotel demand. She said challenges include weakening consumer spending and increased competition from short-term rentals, cruise lines and other lodging alternatives — all posing downside risks.
CBRE remains optimistic that RevPAR will achieve a nominal record of $100.54 this year, representing 114.5% of pre-pandemic levels in 2019. This outlook is based on projected average daily rate (ADR) growth of 1.1% and a 10-basis-point increase in occupancy.
Michael Nhu, senior economist and CBRE’s head of global hotels forecasting, said that following stronger-than-expected GDP growth in the second quarter, CBRE anticipates a slowdown in economic growth in the second half of 2024 and into 2025. “If interest rate cuts do not stimulate growth and the economy continues to weaken,” he said, “we may see a decline in RevPAR.”
CBRE expects increasing global wealth and muted supply growth to support lodging fundamentals over the longer term. CBRE forecasts compound annual growth in supply of under 1% over the next three years, as elevated financing and construction costs temper construction activity.
