THE U.S. LODGING industry can expect more RevPAR dips in 2019 and 2020, but 2021 will bring some improvement, according to CBRE’s Hotel Horizons September 2019 Edition.
The CBRE Hotel Research, which earlier predicted a slowdown in 2021, now says shifts in the depth and timing of an expected slowdown in the country’s economy have impacted their outlook for the industry over the next few years.
CBRE predicts GDP growth to average 1.9 percent during the second half of 2019, which is half the pace of growth compared to the first half of the year.
The industry’s performance is expected to go through deceleration in the final six months of 2019. The pace of demand growth, which rose by 2.1 percent during the first half of the year, will slow to 1.4 percent for the rest of the months.
As a result, CBRE now forecasts the national occupancy level to decline by 0.2 percent from 2018 to 2019.
As this demand slowdown is expected to have a negative impact on next year’s ADR, CBRE has lowered the forecast for ADR growth in 2020 to 2 percent.
“Downward pressure on room rates also will come from a rise in new hotel openings,” said Mark Woodworth, senior managing director at CBRE. “Our 2020 supply growth forecast now is 2.1 percent, which is greater than the long-run average of 1.8 percent. This will drive a 0.8 percent national occupancy rate decline for the year.”
CBRE is forecasting a RevPAR growth rate of 1.2 percent for 2020, which is also a downward adjustment from 90 days ago.
However, CBRE predicts the economy to remain somewhat anemic in 2021 and forecast a GDP growth of 1.5 percent. ADR is expected to increase and RevPAR to go up by 0.8 percent RevPAR.
“We foresee estimated annual GDP growth rates ranging from 1.5 percent to 2.3 percent from now to 2022,” Woodworth said. “While these numbers anticipate weaker economic growth, they do not anticipate any major setbacks in the economy. Our forecasts of RevPAR change follow the same general pattern – growth, but at low levels ranging from 0.8 percent to 1.9 percent.”