Finance & DevelopmentFinanceSTR and TE Adjust U.S. Hotel Forecast to Reflect Slightly Lower Occupancy...

STR and TE Adjust U.S. Hotel Forecast to Reflect Slightly Lower Occupancy Projections

HENDERSONVILLE, Tennessee—STR and Tourism Economics adjusted occupancy slightly downward but maintained previous projections for average daily rate (ADR) and revenue per available room (RevPAR) in the final U.S. hotel forecast revision of 2022. Revenue per available room (RevPAR) remains on track for full recovery this year on a nominal basis but not until 2025 when adjusted for inflation.

The updated forecast lowered occupancy by less than a percentage point for 2022.

“As expected, group business travel has been much more aligned with pre-pandemic patterns, specifically in October when group demand hit a pandemic-era high,” said Amanda Hite, STR president. “Leisure travel has maintained its strength since our previous forecast update, and we expect these strong demand trends in both group and leisure to continue through the fourth quarter. Bottom-line performance has also persisted, with our most recent data showing strong profit margins due to lower employment levels and reduced services. The challenges around labor continue to be a concern, as high levels of hospitality unemployment and more spending on contract labor are pushing labor costs on a per-available-room basis above 2019 levels. We continue to take inflation and the likely recession into consideration, but the hotel industry has continued to show resilience through these tougher times, thus the steadiness of our updated forecast.”

“Oxford Economics anticipates a mild recession in the first half of 2023, as higher interest rates and inflation curtail real consumer spending and business investment,” said Aran Ryan, director of industry studies at Tourism Economics. “Weaker economic momentum will temper the travel recovery, but we anticipate the rebuilding of business travel and the ongoing prioritization of leisure travel to support continued lodging demand growth next year.”