Dive Brief:
- STR and Tourism Economics downgraded their 2024 growth outlook for ADR, occupancy and RevPAR in their final U.S. hotel forecast revision of the year, published Tuesday.
- STR and TE lowered their ADR forecast by 0.5 percentage points to 1.5% year-over-year growth and similarly lowered their occupancy outlook by 0.1 percentage points to 62.9%. As a result, the companies downgraded their RevPAR outlook by 0.6 percentage points to 1.4% growth in 2024.
- Based on current economic conditions, STR President Amanda Hite forecasts that higher-end hotels will continue to drive industry performance this year. STR and TE’s forecast, though, was prepared before the presidential election, so the change in administration could alter their 2025 predictions, Hite noted.
Dive Insight:
In STR and TE’s latest industry outlook, Hite maintained her midyear outlook that upper-tier segments will see the highest RevPAR growth in 2024 driven by changing traveler behavior.
At midyear, Hite noted that midscale and economy hotels were feeling “the effect of fewer lower-income travelers,” while high-income households continued to travel.
The outlook for 2025, though, remains “somewhat in flux,” according to Hite. “The change in the presidential administration is anticipated to yield stronger economic conditions at first, which is not yet reflected in the data,” she said, referring to the latest outlook.
Aran Ryan, director of industry studies at Tourism Economics, echoed that the changing presidential administration could impact the companies’ hotel growth forecasts for 2025.
“The forecast was prepared pre-election and assumed economic conditions consistent with political status quo,” Ryan said. “There is the potential that the Trump administration will pursue looser fiscal policy and provide a temporary boost to the economy, before offsetting effects such as tariffs and immigration act to moderately slow growth.”
In their latest outlook, STR and TE forecast that hotel RevPAR will grow 1.8% year over year in 2025. That prediction is down from midyear, when the companies forecasted RevPAR would grow 2.6% year over year in 2025.
Several economic drivers bode well for growth in travel activity next year, though, Ryan noted. “Consumer spending and business investment are expected to expand, helping support additional gains in business and group travel demand. Growth in international visitation also represents a tailwind for 2025,” he said.
Heightened group travel in the third quarter of 2024 boosted several hotel companies’ quarterly performance results, and group demand is expected to continue to benefit hotels in 2025, execs noted during Q3 earnings calls.
