STR, TE forecast muted occupancy, RevPAR, and ADR growth for 2023-24
RevPAR projected to exceed long-term average due to early 2023 growth
By Vishnu Rageev RAug 11, 2023
REVPAR PROJECTIONS FOR U.S. hotels in 2023 were reduced by 0.5 percentage points due to a 0.6 percentage point drop in occupancy growth, according to the recent forecast by STR and Tourism Economics. However, RevPAR is expected to continue to outperform the long-term average, with a significant portion of the growth concentrated in the initial months of 2023.
The revised 2023-24 U.S. hotel forecast, presented at the 15th Annual Hotel Data Conference held at the Grand Hyatt in Nashville, reflects decreased year-over-year growth projections.
The RevPAR growth projection was similarly reduced by 0.5 percentage points in 2024, due to a corresponding 0.5 percentage point decrease in occupancy. While there was a 0.1 percentage point improvement in the ADR for 2023, it remained unchanged for 2024.
"We adjusted our growth projections in line with the industry's normalization phase," said Amanda Hite, president of STR. "In the last quarter, demand fell short of forecasts, particularly in the luxury sector where travelers curtailed leisure expenses or chose international travel. The midscale and economy segments also experienced a downturn due to recessionary influences. While conflicting indicators of economic deceleration and consumer sentiment emerge, hoteliers maintain optimism, especially in the mid-to-upper market tiers."
"Much of the data's normalization reinforces this optimism, with a consistent rise in business travel and ongoing enhancement in key markets," Hite added. "While ADR growth rates have eased as the effects of inflation and exceptional leisure travel subside, our projected growth rates remain tilted toward upscale hotels, reflecting a performance strategy centered on rates."
"The economy has showcased its resilience, yet the combined consequences of prior interest rate increases by the Federal Reserve and reduced lending by banks are poised to contribute to a mild recession later this year," stated Aran Ryan, industry studies director at Tourism Economics. "The lodging demand's exposure to this deceleration will be contained, as group and business travel rekindle, global tourists make a comeback, and leisure travelers persist in allocating space within their household budgets for travel priorities."
Similar to the previous forecast, profit growth will be constrained in 2023, with a slight improvement anticipated for 2024. In June, STR and TE reported that while RevPAR achieved full recovery in nominal terms in 2022, the adjustment for inflation (real) indicates that it's not projected to reach that level until 2025.
Sonesta launched Americas Best Value Studios, an extended-stay version of ABVI.
The model targets owners seeking limited front desk and housekeeping.
The brand meets demand for longer-term, value-focused stays.
SONESTA INTERNATIONAL HOTELS Corp. launched Americas Best Value Studios by Sonesta, an extended-stay version of its franchised brand, Americas Best Value Inn. The model targets owners seeking limited front desk and housekeeping, optional fitness center and lobby market along with standard brand requirements.
The brand aims to address the growing demand for longer-term, value-driven accommodations, Sonesta said in a statement.
"Americas Best Value Studios by Sonesta represents a strategic evolution of our trusted Americas Best Value Inn brand," Keith Pierce, Sonesta’s executive vice president and president of franchise development, said. "We are expanding our offerings to directly address the increasing demand within the extended-stay segment, providing a practical solution for travelers seeking longer-term lodging at value. This new brand type allows our local franchised owner-operators to tap into a growing market while maintaining the community-focused experience that Americas Best Value Inn is known for."
ABVI has a majority presence in secondary and tertiary markets, the statement said.
The extended-stay brand’s operational model features a front desk, bi-weekly housekeeping, on-site laundry and pet-friendly accommodations, Sonesta said. Guests can also earn or redeem points through the Sonesta Travel Pass loyalty program.
In August, Sonesta named Stayntouch its preferred property management system after a two-year review of its ability to support the company’s franchise model. The company operates more than 1,100 properties with more than 100,000 rooms across 13 brands on three continents.
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