STR and Tourism Economics have increased their projected year-over-year increase of average 2023 U.S. hotel industry daily rates and revenue per available room, despite mild recession concerns and lower projected occupancy increases than in its previous forecast, the companies announced.
The updated 2023 U.S. hotel rate projections show ADR at around $151.10, which is 2.1 percent over 2022 levels and RevPAR at $96.44, which is 3.7 percent over 2022 levels—all slightly higher expectations than the previous forecast, released in November.
The companies also project a 2023 occupancy rate of 63.6 percent, down from 63.8 percent in the prior forecast and up from 62.7 percent in 2022.
Citing an Oxford Economics forecast of a “mild recession” this year, Tourism Economics director of industry studies Aran Ryan in a statement said that “we expect lodging demand growth will slow but remain positive on a year-over-year basis as group events and international travelers return, and households continue to prioritize leisure travel.”
Overall, STR expects “a strong first quarter,” especially when compared the Covid-related travel disruptions of Q1 2022, followed by “slowed demand in the second quarter,” STR president Amanda Hite said Monday during a panel discussion at the Americas Lodging Investment Summit in Los Angeles.
Despite a possible recession, STR projects performance growth in 2023 to be “pretty remarkable,” Hite added in the report. Hite also said gains may be slowing, but demand remains strong as well given a “substantial return in group business.” While business travel still has room to grow, according to Hite, the industry still is positioned to see “a return to the year-over-year benchmark as the pandemic calendar comparables are behind us.”
STR and TE now project 2024 U.S. occupancy of 65.3 percent, slightly lower than its prior forecast but higher than projected 2023 levels. ADR in 2024 is projected to increase 3.8 percent from 2023, about the same as its previous forecast, while RevPAR is expected to increase 6.6 percent over 2023, which was slightly less than the prior forecast.