Lodging data provider STR and Tourism Economics upgraded their U.S. hotel forecast this week at the Americas Lodging Investment Summit in Los Angeles. The sunnier outlook is driven in large part by continued strengthening of the average daily rate.
The industry's timeline for recovery remains very similar to what was forecast in November 2021: Average daily rate should surpass prepandemic levels this year, while revenue per available room and occupancy should exceed 2019 benchmarks in 2023.
Adjusting those projections for inflation extends the recovery cycle, however, with neither ADR nor RevPAR recovering until after 2025.
U.S. hotels recovered 83 percent of their prepandemic RevPAR levels in 2021, STR reported last week, and now ADR is expected to drive recovery even more rapidly. "Momentum is expected to pick up after a slow start to this year,” said Carter Wilson, STR’s senior vice president of consulting. The nature of the recovery is a little more complex, however, and not without caveats.
“With so much of that RevPAR recovery being led by leisure-driven ADR, it is important to keep an eye on the real vs. the nominal," Wilson continued. "Terms of recovery are not playing out evenly across the board, and many hoteliers have had to raise rates to minimize the bottom-line hit from labor and supply shortages. We are anticipating inflation to remain higher throughout the first half of the year with a gradual leveling off during Q3 and Q4. If that happens, and we avoid major setbacks with the pandemic, this year will certainly be one to watch with demand and occupancy also shaping up to hit significant levels during the second half.”
The outlook for sustained recovery begins to improve more significantly after the first quarter, according to STR and Tourism Economics. The actual 2021 metrics slightly exceed the November 2021 forecast, and the outlook for 2022 and beyond is also upgraded. The analysts now project 2022 occupancy to be 63.8 percent (vs. the 63.4 percent forecast in November), with an ADR of $134 (up from the previously projected $130) and RevPAR of $86 (vs. $82). The new projected RevPAR would be just 1 percent less than the 2019 benchmark.