Photo Credit: skvalval for Adobe Stock
As expected, lodging data-provider STR and Tourism Economics have downgraded projections slightly for their final U.S. hotel forecast of the year. Predicted increases have been softened with each progressive quarterly forecast in 2024.
For the 2024 numbers, projections for all three major metrics were lowered. The predicted average daily rate increase was downgraded by 0.5 percentage points to 1.5 percent; the revenue per available room rise dropped by 0.6 percentage points to 1.4 percent; and the occupancy outlook was lowered by 0.1 points to 62.9 percent for the year.
Looking ahead to next year, projected occupancy was pulled back by 0.4 percentage points while ADR is now expected to grow 1.6 percent and RevPAR by 1.8 percent. The previous STR/TE forecast had projected ADR and RevPAR increases of 2.0 percent and 2.6 percent respectively in 2025.
Photo Credit: CoStar GroupMostly positive, with uncertainties
"The outlook for 2025 remains somewhat in flux, with positive sentiment potentially offset by the higher cost of living," said STR president Amanda Hite. "Based on current economic conditions, higher-end hotels will continue to drive industry performance."
Overall, the forecast for travel and meetings in 2025 remains positive. "Looking ahead to next year, the economic drivers are supportive of growth in travel activity," said Aran Ryan, director of industry studies at Tourism Economics. "Consumer spending and business investment are expected to expand, helping support additional gains in business and group-travel demand. Growth in international visitation also represents a tailwind for 2025."
The forecast was prepared before the U.S. election, so the data doesn't reflect those results. There remain questions, of course, as to how the new administration's approach will affect travel.
"There is the potential that the Trump administration will pursue looser fiscal policy and provide a temporary boost to the economy, before offsetting effects, such as tariffs and immigration act, could moderately slow growth," noted Ryan.