Dive Brief:
- In their first U.S. hotel forecast of the year, STR and Tourism Economics raised their 2024 growth projection for ADR slightly, by 0.1 percentage points.
- The companies’ growth projections for occupancy and RevPAR in 2024 remain unchanged from a November forecast, in which they predicted occupancy would grow by 1% and RevPAR would increase by 4.1%.
- A separate report out this week from CoStar, the holding company of STR, found that the U.S. hotel industry posted record ADR and RevPAR in 2023, and occupancy reached its highest levels since 2019. STR predicts performance growth will stay strong in 2024 as a result of solid travel fundamentals, including heightened group business demand, company President Amanda Hite said.
Dive Insight:
In 2023, ADR increased 4.3% year over year to $155.62, and RevPAR rose 4.9% year over year to $97.97, according to CoStar data. Additionally, U.S. hotel occupancy increased by 0.6% year over year to 63%.
Of the top 25 U.S. markets, New York City experienced the highest levels in each of the three performance metrics last year, the CoStar report detailed. The city’s occupancy increased 8.8% year over year to 81.6%, ADR increased 8.5% year over year to $301.22 and RevPAR rose 18.1% year over year to $245.77.
Local hospitality experts previously told Hotel Dive that New York’s performance gains were a result of heightened group demand. This also led the city to outpace other U.S. markets in gross operating profit per available room growth in October, according to a December CoStar report.
STR’s Hite said future performance growth is anticipated in 2024 “as fundamentals remain more favorable for the travel economy,” particularly with growing group demand. An indicator of this growth, she added, is the low unemployment rate among college-educated individuals, who are “most likely to travel for business and leisure.”
Tourism Economics’ director of industry studies, Aran Ryan, agreed that business travel and group events, along with a rebound in international tourism, will drive “modest lodging demand growth” in 2024.
However, he also forecasted a “deceleration in economic growth” this year, “characterized by softer labor markets and business sector caution.”
