Tue Oct 08 15:53:29 UTC 2024: ## US Hotel Industry Shows Resilience Despite Slowing Growth: RevPAR Recovers in Most Markets
**New York, NY** – The US hotel industry continues to rebound, with RevPAR (Revenue Per Available Room) reaching pre-pandemic levels in 57 out of 65 major markets tracked by CBRE in the first half of 2024. However, the industry is facing headwinds, prompting CBRE to lower its full-year RevPAR growth forecast to 1.2 percent, down from the previously predicted 2 percent.
Despite the slowdown, the second half of the year is expected to see a stronger performance, with RevPAR projected to increase by 2 percent. This optimistic outlook is attributed to a number of factors, including election-related events, easier year-over-year comparisons, rising international inbound tourism, anticipated interest rate cuts, and a modest uptick in group and business travel.
While most US markets have recovered, Northern California and the Upper Midwest are lagging behind. Major East Coast cities like New York, Boston, Washington D.C., Atlanta, and Miami have surpassed 2019 levels.
CBRE highlights several challenges facing the industry, including record outbound international travel, weaker consumer demand, and increased competition from short-term rentals, cruise lines, and other alternative lodging options. These challenges are partly offsetting the recovery in inbound travel and the modest rise in group and business travel.
Resort locations are facing the most significant slowdown, with RevPAR growth now projected to be flat, compared to the previously forecasted 1.6 percent increase. Increased competition from cruise lines and short-term rentals, along with a growing preference for European and Latin American vacations, are impacting traditional hotels’ market share.
Looking ahead, CBRE anticipates modest hotel supply growth of under 1 percent over the next three years due to high construction and financing costs. However, strong long-term fundamentals are projected, supported by rising global wealth and limited supply growth.
Despite the current slowdown, CBRE forecasts a compound annual growth rate of 2.5 percent for RevPAR over the next five years, barring a recession or global economic shocks. Urban hotels are expected to outperform, with a RevPAR CAGR of 3.5 percent, as they benefit from increased inbound international travel.
CBRE’s outlook for the global hotel industry remains optimistic, with strong growth projected in key regions such as Northern Latin America, Europe, and the Middle East. While China’s tourism recovery is expected to be slower, the Asia Pacific region is showing strong growth in air travel, despite challenges like staffing issues and aircraft shortages.
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