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CBRE HOTELS RECENTLY reduced U.S. hotel forecast as lodging demand dips amid soft leisure travel and slower corporate profit growth. The upcoming election in November and other economic factors led to the revisions. The research group now projects a 1.2 percent RevPAR increase for 2024, down from 2 percent in May. However, it expects a 2 percent RevPAR growth in the second half of 2024, up from 0.5 percent in the first half, driven by international tourism and election events. Lodging industry performance is closely linked to economic strength, with GDP growth generally correlating with RevPAR growth, CBRE said in a statement. The company forecasts 2.3 percent GDP growth and 3.2 percent average inflation for 2024. "We expect 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," said Rachael Rothman, CBRE's head of hotel research and data analytics. "Challenges including weakening consumer spending and increased competition from short-term rentals, cruise lines and other lodging alternatives pose downside risks."

STR AND TOURISM Economics downgraded their growth rate forecast for the U.S. hotel business with their final revision of 2024. The forecast for next year remains uncertain as the impact of the presidential election becomes clear. For 2024, projected gains in ADR and RevPAR were each downgraded, down 0.5 percentage points to 1.5 percent growth for ADR and with RevPAR's projected growth dropping 0.6 ppts to 1.4 percent, respectively. Occupancy for the year was lowered 0.1 ppts to 62.9 percent, after the previous forecast projected the metric to remain steady from 2023. For 2025, the occupancy growth projection was downgraded 0.4 ppts, and the forecast for ADR and RevPAR increases were lowered to 1.6 percent and 1.8 percent, respectively. "The outlook for 2025 remains somewhat in flux, with positive sentiment potentially offset by the higher cost of living," said Amanda Hite, STR president. "Based on current economic conditions, higher-end hotels will continue to drive industry performance. The change in the presidential administration is anticipated to yield stronger economic conditions at first, which is not yet reflected in the data."

APPROXIMATELY 6,095 PROJECTS with 713,151 rooms are in the U.S. construction pipeline at the end of the second quarter, according to Lodging Econometrics. This all-time high marks a 9 percent year-over-year increase in projects and an 8 percent increase in rooms compared to the second quarter of 2023. LE's Q2 2024 U.S. Hotel Construction Pipeline Trend Report revealed 1,171 projects with 147,611 rooms under construction at the end of the second quarter, reflecting a 10 percent increase in projects and a 4 percent increase in rooms year-over-year. LE expects that as interest rates decline, projects scheduled to start in the next 12 months will quickly move to under construction. Extended-stay brands remain popular with developers, comprising 36 percent of projects under construction, 33 percent of those starting in the next 12 months and 34 percent of projects in early planning, the report said. Sixty-four percent of these projects are in the middle tier of brands.

THE U.S. PIPELINE reached a record 6,211 projects and 722,821 rooms, up 9 percent and 7 percent year-over-year, according to Lodging Econometrics' third quarter 2024 U.S. Hotel Construction Pipeline Trend Report. Dallas leads the five markets with the largest hotel construction pipelines, reaching a record 194 projects and 22,803 rooms. Approximately 1,185 projects with 148,716 rooms were under construction at the end of the third quarter, which is an 11 percent increase in projects and 6 percent in rooms year-over-year, the report said. Projects set to start construction within 12 months total 2,209 projects with 251,797 rooms. Early planning reached 2,817 projects and 322,308 rooms, both up 17 percent year-over-year. LE analysts reported that the upper-midscale chain scale leads the pipeline with 2,315 projects and 224,703 rooms, followed by upscale with 1,407 projects and 174,127 rooms. Together, these segments comprise 60 percent of all projects. The midscale segment also reached a record with 928 projects and 77,600 rooms, up 19 percent in projects and 16 percent in rooms year-over-year.

U.S. HOTEL PERFORMANCE is expected to rebound in the fourth quarter and continue into 2025 despite subdued summer demand and a sluggish third quarter, according to CBRE. RevPAR growth for 2024 is now projected at 0.5 percent, down from 1.2 percent in August, due to a 40 bps drop in expected occupancy. Occupancy is forecast to decline 30 bps year-over-year while ADR is projected to rise 0.7 percent, 40 bps below earlier forecasts, the report said. RevPAR growth is expected to rebound in the four quarter of 2024, driven by rate cuts, easing inflation and stock market gains. "U.S. hotels performance was softer-than-expected during the summer months, partly due to Americans traveling overseas in record numbers," said Rachael Rothman, CBRE's head of hotel research and data analytics. "At the same time, the slow recovery in inbound international travel has created an imbalance in U.S. leisure demand. Despite this, continued improvements in group and business travel served as relative bright spots in the third quarter."

STR AND TOURISM Economics made significant downward adjustments to the 2024-25 U.S. hotel forecast, reflecting lower-than-expected performance and reduced growth projections for the remainder of the year. Projected gains in ADR and RevPAR were downgraded by 1 and 2.1 percentage points, respectively. Occupancy is also expected to decline, contrasting with the previous forecast's projection of year-over-year growth in this metric. While an occupancy growth projection was maintained for 2025, ADR and RevPAR were adjusted downward by 0.8 and 0.9 percentage points, respectively, STR and TE said in a joint statement. "We have seen a bifurcation in hotel performance over the first four months of the year, which we don't believe will abate soon," said Amanda Hite, STR's president. "The increased cost of living is affecting lower-to-middle income households and their ability to travel, thus lessening demand for hotels in the lower price tier. The upscale through luxury tier is seeing healthy demand, but pricing power has waned given changes in mix and travel patterns and to a lesser extent, economic conditions. Travel remains a priority for most Americans, but the volume has lessened as prices on goods and services continue to rise."

U.S. HOTELS ARE likely to report improved RevPAR growth in the second half of the year, following a weak first quarter, according to CBRE. International tourism and other economic factors are expected to provide a boost to performance. A 2 percent increase in RevPAR growth is forecasted for 2024, down from the 3 percent estimated in February. RevPAR is now expected to grow by 3 percent for the remainder of the year, driven by international tourists, holiday travel, and limited supply growth. It is projecting GDP growth of 2.3 percent and average inflation of 3.2 percent in 2024. The performance of the lodging industry is closely tied to the strength of the economy, as there is typically a strong correlation between GDP and RevPAR growth, CBRE said in a statement.

ADR is projected to rise by 0.1 percentage points in 2024, with occupancy and RevPAR remaining unchanged from the previous forecast, according to STR and Tourism Economics' initial U.S. hotel forecast for 2024 at the Americas Lodging Investment Summit. Yet, 2025 projections for key performance metrics were revised downward due to stabilized long-term average trends: occupancy down 0.1 percentage points, ADR down 0.3 points and RevPAR down 0.5 ppts. "U.S. ADR and RevPAR reached record highs in 2023 with solid travel fundamentals and a big year for group business underpinning performance," said Amanda Hite, STR president. "We expect to see continued growth as fundamentals remain more favorable for the travel economy. The indicator that is especially important is the low unemployment rate among college-educated individuals, those most likely to travel for business and leisure." The STR and Tourism Economics forecast a rise in GOPPAR growth due to increased TRevPAR levels and stable labor costs. Among chain scales, luxury and upper upscale hotels are expected to see substantial cost increases, driven by growing group demand.

U.S. REVPAR IS expected to grow by 1.2 percent this year, down from the previously forecasted 2 percent, according to CBRE. Despite lower full-year projections, second-half growth is set to improve, with a 2 percent increase compared to 0.5 percent in the first half. CBRE's 2024 Global Midyear Hotels Outlook attributes these second-half growth projections to election-related events in the U.S., easier year-over-year comparisons, rising inbound international visitors, anticipated interest rate cuts, and a slight uptick in group and business travel. In the first half of 2024, RevPAR in 57 of the 65 U.S. markets tracked by CBRE returned to pre-pandemic levels. Most of the eight markets still lagging are in Northern California and the Upper Midwest. Major East Coast markets, including New York, Boston, Washington D.C., Atlanta and Miami, have surpassed 2019 levels.

U.S. HOTEL CONSTRUCTION reached record levels in the fourth quarter of 2024, with 6,378 projects and 746,986 rooms in the pipeline, according to Lodging Econometrics' latest Hotel Construction Pipeline Trend report. This reflects 7 percent year-over-year growth in projects and an 8 percent increase in rooms. The U.S. hotel pipeline showed strong activity across all stages, LE said. Projects under construction totaled 1,149, with 142,238 rooms, a significant year-over-year increase, the report said. Furthermore, 2,259 projects with 259,108 rooms are scheduled to break ground in the next 12 months. Early planning reached a record high with 2,970 projects and 345,640 rooms, marking 15 percent growth in projects and a 19 percent rise in rooms compared to the previous year.

A STABLE ECONOMIC backdrop is expected to fuel a 10.7 percent year-over-year increase in the U.S. short-term rental industry in 2024, surpassing the 6.7 percent rise seen in 2023, according to AirDNA's 2024 outlook report. Moreover, AirDNA foresees balanced growth for the industry in 2024, marked by a projected 10.9 percent increase in supply expansion guided by rising demand for more sustainable market practices. "Approaching 2024, the industry anticipates balanced growth with a projected 10.9 percent increase in supply expansion," said Jamie Lane, senior vice president of Analytics at AirDNA. "Contrary to exaggerated reports of an STR 'collapse,' heightened market competition emphasizes the need for hosts and property managers to meticulously monitor data trends. This strategic approach is crucial for surpassing competitors and sustaining revenue, taking advantage of a strong economy and the growing preference of travelers for STR lodging."

STR AND TOURISM Economics updated their 2024-25 U.S. hotel forecast, raising projected occupancy by 0.2 percentage points and revising the previous forecast of a year-over-year decline. However, ADR gains were downgraded by 0.1 percentage points, while RevPAR remained unchanged at a 2 percent year-over-year increase. The occupancy growth projection for 2025 was also lifted by 0.2 percentage points, while ADR and RevPAR increases remained at 2 percent and 2.6 percent, respectively, STR and TE said in a joint statement. "Midscale and economy hotels are continuing to feel the effect of fewer lower-income travelers," said Amanda Hite, STR's president. "On the other hand, high-income households continue to travel, but domestic levels are constrained due to an increase in outbound travel. The stronger dollar continues to pressure international inbound demand, especially as the cost-of-living crisis continues in Europe and airlift rebuilds across Asia Pacific."

U.S. EXTENDED-STAY HOTEL occupancy declined across 59 MSAs in 2023 compared to 2019, primarily due to significant ADR growth over the past three years, according to The Highland Group. Additionally, extended-stay hotel RevPAR surged in more than 80 percent of MSAs, with ten of them, including four major hotel markets, experiencing gains exceeding 10 percent. Despite an 8 percent increase in the number of extended-stay hotel rooms under construction in the 100 largest MSAs over the past year, the figures remain below pre-pandemic levels, the report said. The resurgence in occupancy was notably led by smaller markets, where strong ADR increases and supply expansion played pivotal roles in driving the lowest occupancy recovery indices for MSAs in 2023.

THE U.S. IS expected to see 953 hotel openings with 108,366 rooms in 2025, with New York City and Nashville leading at 5,719 and 2,849 rooms, respectively, according to CoStar. Around 1,865 hotels with 198,319 rooms are projected to open in 2026. Other markets, including San Diego, Dallas, and Phoenix, are projected to open 5,719, 2,849, and 2,818 rooms in 2025, the report said. "The ongoing development in New York City is not surprising given the market's status and its high performance in recent years," said Isaac Collazo, STR's senior director, analytics. "With major sources of leisure and business travel, New York reported the highest occupancy level of any U.S. market in both 2023 and 2024. Though fewer rooms are in construction compared to 2023, more are in the planning and final planning stages, pointing to continued investment in the long term."

MARRIOTT INTERNATIONAL IS introducing its "City Express" brand to the U.S. and Canada, marking its entry into the midscale transient segment. Previously known as Project Mid-T, this expansion underscores Marriott's commitment to enhancing its midscale offerings and providing lodging options for all travel purposes. The brand has attracted interest from owners and franchisees and expects to sign agreements, with potential hotel openings in the U.S. and Canada in the coming months, Marriott said in a statement. "Since entering the affordable midscale space with the acquisition of City Express in the Caribbean and Latin America just over a year ago, we have seen significant interest for the brand and are pleased with its growth across the region," said Diana Plazas-Trowbridge, Marriott's senior vice president and global brand leader of select brands. "With this announcement, Marriott aims to continue growth in the affordable midscale segment and provide a new option for value-conscious travelers in the U.S. and Canada."

STR AND TOURISM ECONOMICS have increased year-over-year growth projections for ADR and RevPAR in the final revision of the U.S. hotel forecast for 2023. While some factors, such as higher interest rates and more restrictive lending, may impact the economy, their effect on the travel industry is not expected to be strong. In 2023, RevPAR saw a 0.3 percentage point increase, propelled by a 0.6ppt rise in ADR growth, according to STR and TE. Meanwhile, recent RevPAR trends affirm rate as the predominant performance driver. Occupancy was downgraded by 0.2ppts, STR and TE said in a statement. Growth projections for key performance metrics in 2024 remained flat from the previous forecast, reflecting the stabilization of long-term average trends.