Dive Brief:
- According to the August edition of CBRE’s U.S. Hotels State of the Union, hotel RevPAR declined 0.1% in June on a 1.8% decline in occupancy.
- Chain-affiliated hotels outperformed, increasing 1.6% year over year in June compared with a 4.8% decline for independent hotels.
- Short-term rentals appear to continue gaining ground over hotels. CBRE reports that hotel demand growth declined 1.5% in June, while short-term rental demand rose 14.3%. A recent white paper from Cornell stated that short-term rentals comprise about 25% of the entire U.S. lodging industry.
Dive Insight:
After a robust start to the year, U.S. hotel demand appears to be on a steady decline. In its August edition of U.S. Hotels State of the Union, CBRE reports that RevPAR declined 0.1% in June with a decrease in occupancy, a trend that is expected to continue through the rest of 2023.
Due to the weaker-than-expected summer demand, CBRE has reduced its forecast for hotel performance for 2023, revising RevPAR to $96.64, up 4.6% year over year, but down $1.25 from its previous forecast in May. The revision is predicated on a 70-basis-point decrease in expected occupancy compared with the earlier forecast. Average daily rate is expected to increase by 3.6% in 2023, down 10 bps from the previous forecast.
Similar to Q2 reports, the latest U.S. Hotels State of the Union also found that the best performing location type was urban, with the weakest being resort, having declined for the third month in a row.
Also of note, CBRE reports hotel demand growth declined 1.5% in June, while short-term rental demand rose 14.3%. Since the pandemic, short-term rentals have increased market share by 5.3 percentage points. AirDNA, which tracks short-term rental data, reported that July set demand records for the short-term rental market in the US.
According to the report, “July 2023 broke the record for the most short-term rental stays in one month, with 35.4 million nights stayed, beating the previous high recorded in July 2022 by 9.4%. Although slower than June’s demand growth of 12.5% on a year-over-year (YOY) basis, the results were especially impressive amid a searing heatwave, increasing interest in off-season booking, and inflation-weary consumers looking for budget options.”
