Skip to content

Search

Latest Stories

Delta variant forces CBRE to revise its economic forecast

U.S. hotels’ occupancy is expected to average 54 percent for the year

Delta variant forces CBRE to revise its economic forecast

THE LONG-AWAITED RETURN of business travel may be delayed as a result of the Delta variant of COVID-19, according to CBRE Hotels Research. As a result, the firm has revised its forecast for the year’s fourth and final quarter.

CBRE’s new forecast will extend into 2022 under the expectation that corporate travel budgets will remain constrained until that time. The firm said the momentum the industry developed over the summer due to a surge in leisure travel has been handicapped by Delta’s impact on business travel, leading to a “second-derivative” market condition in which the recovery continues but at a slowing pace.


“The Delta variant and increasing number of COVID infections led to delays in ‘return to office’ plans at many firms and coincided with the start of the 2022 travel-budgeting season,” said Rachael Rothman, CBRE’s Head of Hotel Research & Data Analytics. “Unfortunately, for business centric hotels, the rebound in business travel expected in September of 2021 is now delayed and will likely have a ripple effect into 2022’s corporate travel budgets.”

U.S. hotels’ annual occupancy level is now expected to reach 54 percent for the year, according to CBRE. ADR is expected to average $112.85 and RevPAR is forecast to average $60.91, a 41.7 percent increase over the annual RevPAR of $42.97 recorded in 2020. However, the RevPAR amount is 29.3 percent less than the $86.16 RevPAR posted in 2019.

CBRE said it expects convention travel to resume first in markets with low operating costs, inexpensive airline flights and relatively few health restrictions. Warm-weather markets, such as Dallas, New Orleans, San Antonio, Las Vegas and Orlando are likely to be in demand. Leisure and “bleisure” travel, which is a combination of business and leisure travel, are expected to augment the regular business travel even though 2022 corporate-travel budgets are being impacted by the Delta variant.

Occupancy is still expected to rise 8 percent in 2022 while ADR should go up 7.1 percent, leading to a 15.6 percent increase in RevPAR. Much also depends on activity in each hotel’s local markets because 75 percent to 80 percent of a hotel’s performance is dictated by local economic and market factors, according to CBRE.

“In general, Sunbelt cities and drive-to leisure destinations are expected to perform the best, while group-oriented hotels, northern markets, and global gateway cities reliant on inbound international travel are projected to lag in performance,” said Bram Gallagher, CBRE’s senior hotel economist. “The pace of recovery for business and group demand is top of mind for most hoteliers.”

Urban-core markets are expected to be most heavily impacted by the delayed return to office and the ‘great migration south’ that took place over the pandemic. Also, business travelers are expected to take fewer but longer trips to avoid flights that might expose them more to COVID. They also are expected to stay longer in leisure markets in order to incorporate “shoulder stays” that allow for leisure time after the business time.

CBRE predicts that U.S. national occupancy will approach the long-run average of 62 percent in 2023.

“However, occupancy isn’t expected to return to its lofty pre-COVID rates in the foreseeable future, given that many general managers and prioritizing rate gains despite the potential resulting drop in occupancy,” CBRE said in a statement. “CBRE anticipates that nominal ADR levels will reach the prior peak by the second quarter of 2023. On a combined basis, the improvements in ADR and occupancy should lead to a full recovery in nominal RevPAR by 2024.”

In July, CBRE predicted U.S. lodging demand will return to pre-pandemic levels by the fourth quarter of 2023.

More for you

Howard Johnson 100th anniversary

HoJo marks centennial with throwback

Summary:

  • Howard Johnson is marking its 100th anniversary with fried clam–shaped soaps.
  • The soaps pay homage to an iconic HoJo menu item.
  • Available at select hotels and for online purchase starting Oct. 3.

HOWARD JOHNSON BY Wyndham marks a century with one of its most famous menu items, the fried clam strip. The brand is introducing limited-edition HoJo’s Original Fried Clam Soap, available at select Howard Johnson hotels across the U.S. and for online purchase beginning Oct. 3.

Keep ReadingShow less
American Franchise Act announced in U.S. Congress to protect hotel franchising and jobs

House unveils act to boost franchise business

Summary:

  • House introduces AFA to boost franchise model and hotel operations.
  • The act establishes a joint employer standard.
  • AHLA backs the bill, urging swift adoption.

THE HOUSE Of Representatives introduced the American Franchise Act, aimed at supporting the U.S. franchising sector, including 36,000 franchised hotels and 3 million workers nationwide. The American Hotel & Lodging Association, backed the bill, urging swift adoption to boost the franchise model and clarify joint employer standards.

Keep ReadingShow less
Noble Investment Group Mobile Alabama

Noble breaks ground on StudioRes in Mobile, AL

Summary:

  • Noble broke ground on StudioRes Mobile Alabama at McGowin Park.
  • The 10th StudioRes expands Noble’s long-term accommodations platform.
  • Noble recently acquired 16 WoodSpring Suites properties through two portfolio transactions.

NOBLE INVESTMENT GROUP broke ground on StudioRes Mobile Alabama at McGowin Park, a retail center in Mobile, Alabama. It is Noble’s 10th property under Marriott International’s extended stay StudioRes brand.

Keep ReadingShow less
The Boxer Boston hotel sold by Hersha Hotels to Eurostars Hotels for $23.6 million
Photo Credit: The Boxer Boston

Hersha sells ‘Boxer Boston’ to Eurostars

Summary:

  • Hersha Hotels & Resorts sold The Boxer Boston to Eurostars Hotels.
  • The company acquired the property in 2012 for $12.6 million.
  • The property now sold for $23.6 million.

HERSHA HOTELS & RESORTS sold The Boxer Boston, an 80-room hotel in Boston’s West End, to Eurostars Hotels, part of Spain’s Grupo Hotusa. The company, which reportedly acquired the property in 2012 for $12.6 million, received $23.6 million for it.

Keep ReadingShow less
Peachtree Group Inc. 5000 2025

Peachtree receives two recognitions

Summary:

  • Peachtree recognized by Inc. and the Atlanta Business Chronicle.
  • Named to the 2025 Inc. 5000 list for the third year.
  • Chronicle’s Pacesetter Awards recognize metro Atlanta’s fastest-growing companies.

PEACHTREE GROUP ENTERED the 2025 Inc. 5000 list for the third consecutive year. The company also won the Atlanta Business Chronicle Pacesetter Awards as one of the city’s fastest-growing private companies.

Keep ReadingShow less