Skip to content

Search

Latest Stories

CBRE now forecasts RevPAR will regain 2019 levels by third quarter

Strong employment, low supply drive new predictions upward, but inflation and geopolitical instability still threaten

CBRE now forecasts RevPAR will regain 2019 levels by third quarter

A STRONGER THAN expected performance by U.S. hotels in the fourth quarter of 2021 led CBRE Hotels Research to upgrade its forecast for the rest of 2022. CBRE now forecasts RevPAR will reach 2019 nominal levels by the third quarter of this year, one year earlier than the previous forecast.

Occupancy is expected to rise 6.7 percent to 61.3 percent this year, then rise 5.2 percent to 64.4 percent in 2023. ADR is forecast to rise 10.1 percent to $133.94 in 2022 and go up 6 percent more to $141.99 in 2023. CBRE expects RevPAR to rise 17.5 percent in 2022 overall to $82.04 and then rise 11.5 percent to $91.46 in 2023.


Positive trends, such as high employment and the return to the office for many workers who had been working from home contributed to the revised forecast, CBRE said. Other factors contributing to the improvement include below-average supply growth, strong domestic leisure trends, the resumption of inbound international travel and a predicted return to office later this year. However, ongoing inflation and geopolitical tensions connected to the war in Ukraine still threaten progress.

In December, RevPAR exceeded 2019’s levels for the first time since the pandemic began, then dropped back to 21.7 percent below 2019 by January. A shift from the leisure-centric holiday season to the business-driven first quarter likely caused the drop, along with heightened geopolitical and inflation risks.

ADR reached 2019 nominal levels in last year’s third quarter, according to CBRE’s December 2021 edition of its Hotel Horizons report. CBRE expects ADR to again exceed 2019 levels this quarter following a pause. A recovery in higher-rated, inbound international travel, the resumption of more traditional business travel, labor market tightness and higher overall inflation will lead to higher rates.

The U.S. consumer price index was 6.7 percent year-over-year in the fourth quarter of 2021 and hit 7.9 percent in February 2022, according to the Bureau of Labor Statistics. CBRE forecasts that CPI will reach slightly more than 6 percent in 2022 before dropping to around 2 percent in 2023 and after.

“Higher room rates will lead to a quicker return to 2019’s nominal ADR levels,” said Rachael Rothman, CBRE’s head of hotel research and data analytics. “But, from a profitability perspective, inflation will be a headwind through higher utilities, supplies and labor.”

The effects of inflation on ADR won’t be uniform, said Bram Gallagher, CBRE senior hotel economist.

“Historically, most hotels can respond to inflation with price increases, but only luxury hotels have demonstrated that they can exceed the pace of inflation to achieve real gains,” he said. “Economy hotels have the most difficulty raising prices enough to keep up.”

Domestic and drive-to resorts are expected to once again be top destinations in 2022 because the war in Ukraine and a resurgence of COVID in Asia could persuade wealthier U.S. travelers to lean toward domestic destinations closer to home. However, elevated gas prices could hurt interstate hotels as fewer budget-minded consumers cut travel.

“Longer-term, muted supply growth will mitigate the blow for the hotel industry. High construction-material prices, including lumber, steel and labor, make the development of most new projects cost prohibitive, limiting the delivery of new rooms over the medium to longer term,” said CBRE. “CBRE forecasts that supply will increase at a 1.2 percent compound annual growth rate over the next five years, well below the industry’s 1.8 percent long-term historical average.”

More for you

FIFA Club World Cup Boosts Hotel Occupancy in U.S. Cities
Photo by Dan Mullan/Getty Images

Report: CWC drives hotel gains in some U.S. cities

Summary
  • The FIFA Club World Cup is boosting hotel occupancy in several host markets.
  • Occupancy increases vary by market and by match within markets.
  • The tournament may be hit by falling international arrivals.

THE FIFA CLUB World Cup is driving hotel occupancy increases in some of the tournament’s 11 host markets, according to STR. The tournament, which began June 11, serves as a precursor to next year’s World Cup in the U.S.

The Club World Cup includes matches in Atlanta; Charlotte, North Carolina; Cincinnati; Los Angeles; Miami; Nashville, Tennessee; New York City; Orlando, Florida; Philadelphia; Seattle; and Washington, D.C.

Keep ReadingShow less
Peachtree Group's Residence Inn by Marriott under construction in downtown San Antonio, topping out milestone reached, June 2025

Peachtree tops out San Antonio Residence Inn

Peachtree Hotel to Open in Summer 2026 with 117 Extended-Stay Rooms

PEACHTREE GROUP HELD a “topping out” for its Residence Inn by Marriott in downtown San Antonio, Texas, marking completion of the structural phase of the 10-story, 117-room hotel. The property, co-developed with Austin-based Merritt Development Group, is scheduled to open in summer 2026.

The extended-stay hotel will be owned by Peachtree and managed by its hospitality management division, the company said in a statement.

Keep ReadingShow less
Air India plane crash 2025
Photo by Sam PANTHAKY / AFP

Air India reducing flights after deadly crash

AIR INDIA WILL reduce international service on widebody aircraft by 15 percent through at least mid-July, according to media reports. The decision comes less than a week after the June 12 crash of an Air India airliner carrying 230 passengers and 12 crew members in Ahmedabad, India, that killed 246 but left one survivor among the passengers.

The airline said the reduced service due to the safety inspection of aircraft and ongoing geopolitical tensions in the Middle East, which have disrupted operations, resulting in 83 flight cancellations over the past six days, according to ABC News. Passengers can either reschedule their flights at no additional cost or receive a full refund.

Keep ReadingShow less
hihotels executive team honored for long-term service and loyalty in hospitality

Hihotels recognizes eight company leaders

EIGHT LEADERS OF hihotels by Hospitality International, Inc. are being recognized by the company for their combined 121 years of service. The company was established in 1982 as an alternative to other, established brands.

The honorees include Paul Vakharia, hihotels’ senior director of franchise development for the Northeast Region who has been with the company for 25 years. Chhaya Patel, franchise development coordinator, also has been with the company for 25 years.

Keep ReadingShow less
ICE Raid Resumes in Hotels & Farms After DHS Reversal
Photo by Mario Tama/Getty Images

Reuters: ICE resumes hotel immigration raids

ICE Reverses Decision to Pause Raids on Key Industries

U.S. IMMIGRATION OFFICIALS have reversed enforcement limits at hotels, farms, restaurants and food processing plants days after issuing them, following conflicting statements by President Donald Trump, according to Reuters. ICE leadership told field office heads on Monday it would withdraw last week's directive that paused raids on those businesses.

ICE officials were told a daily quota of 3,000 arrests—10 times the average last year under former President Joe Biden—would remain in effect, two former officials said in the report. ICE field office heads raised concerns they could not meet the quota without raids at the previously exempted businesses, Reuters reported, citing a source.

However, it was not clear why the directive was reversed.

Keep ReadingShow less