Hotels have been performing remarkably well lately, even with the lackluster recovery in business travel and CBRE says they are poised to hit a post-pandemic milestone: This year RevPAR in most metro markets will be back at 2019 numbers or have exceeded them. In 2022, RevPAR recovered nationally but continued to lag in many of the major markets including northern California, the upper-Midwest, and along the northeast corridor from Washington, D.C. through New York.
RevPAR for the overall U.S. lodging market is forecast to increase by 5.8%, and according to the February 2023 edition of Hotel Horizons, properties in 65 markets it analyzes are expected to record RevPAR growth of 8.8%. RevPAR gains in the top 25 markets (9.3%) are expected to surpass both the overall U.S. lodging market and the 65 Hotel Horizons markets, CBRE said.
Among those booking rooms are travelers from overseas, particularly after Japan and China removed travel restrictions, plus the business travelers and group travel goers. Will there be rooms? Supply is forecast to increase by 1.2%.
Who Reaps the Biggest Gains?
Several markets are predicted to gain the greatest positive change in demand this year, including New York, Washington, D.C. San Francisco, Minneapolis and Chicago. Their numbers may soar above the national forecast of 2.7%. In fact, the nation’s capital is expected to experience the greatest occupancy gains as it experiences the return of international tourism and group travel.
In contrast, the Sun Belt market, which achieved strong ADR growth rates the earliest during the pandemic and recovered the fastest as many sought sunshine and outdoor greenery after being indoors, now are seeing the most modest changes. The reason is said to be the difficulty of continuing double-digit percentage ADR (average daily rate) gains as price pressures emerge. Among the cities facing this challenge are Savannah and the three Florida cities of Miami, Ft. Lauderdale and Saint Petersburg.