CBRE Hotels Research is predicting hotel demand to remain well below supply through 2021, with increases coming by 2022.

THE U.S. LODGING supply will increase at an annual pace higher than the long-run average through 2022, the latest CBRE Hotels Research reveals. At the same time, the research forecasts a decline in occupancy as the annual rise in the demand for these new rooms is projected to average roughly three-quarters of its respective long-run average.

U.S. national occupancy levels are expected to remain flat in 2019 at 66.2 percent, then decline to 65.7 percent in 2020 and 64.6 percent in 2021. CBRE is projecting a deceleration in the U.S. GDP from a 2.2 percent rise in 2019 to increases of just 0.7 percent in 2020 and 1.4 percent in 2021.

As impact on changes in lodging demand usually lag GDP movements by one year, CBRE’s forecasts of annual growth rates for demand are 2 percent in 2019, 1.1 percent in 2020 and just 0.1 percent in 2021.

CBRE’s forecasts improved GDP growth to 2.7 in both 2022 and 2023. Accordingly, the firm’s projections for lodging demand surge to 2.4 percent and 3.3 percent respectively.

“While our forecasts for national supply growth from 2019 through 2022 exceed the STR long-run average of 1.8 percent, the new hotel rooms are concentrated in just a few markets. Therefore, most markets will realize limited increases in new competition and likely won’t experience a meaningful slowdown in performance,” said John “Jack” Corgel, professor of real estate at the Cornell University School of Hotel Administration and senior advisor to CBRE Hotels Research.

The research also forecasts a 2.0 percent RevPAR growth rate in 2019 and 1.8 percent in 2020. The 2020 economic slowdown will result in a 0.5 percent decline in RevPAR for the first time since 2009.

Corgel and CBRE’s Senior Managing Director Mark Woodworth were downplaying the likelihood of a recession in their final episode for 2018 of their “Lodging Insights” video series.