Better than Expected
The performance of United States hotels doesn’t seem to be slowing down—in fact, it’s beating original forecasts. That’s why a strong first quarter for U.S. hotels is causing some analysts to revise their original forecasts.
CBRE Hotels’ Americas Research took a look at first-quarter hotel performance and has since raised its 2018 outlook for U.S. hotels. According to STR data, U.S. hotels saw a 3.5-percent increase in revenue per available room during the quarter, which exceeded the 2.5-percent increase CBRE had expected. Thus, CBRE is now forecasting RevPAR for U.S. hotels to increase 2.8 percent this year. That’s a 0.3-percentage-point improvement over the 2.5-percent figure CBRE predicted in March.
“We continue to be impressed by the ability of the U.S. economy to support demand growth for accommodations away from home,” R. Mark Woodworth, senior managing director of CBRE Hotels’ Americas Research, said in a recent news release.
He said the U.S. economy helped hotel demand grow 3 percent during the first quarter, which is a full 1.1 percentage point greater than was expected and marks 33 consecutive quarters of demand growth.
Due to the increase seen during the quarter, CBRE has updated its annual forecast for demand growth. The firm has increased its forecast from 1.8 percent growth to 2.1 percent growth for the year. With U.S. hotel supply predicted to grow 2 percent, CBRE has now flipped its occupancy projection from a 0.1-percent decline to an increase of 0.1 percent.
“Looking toward 2019, we foresee another year of occupancy growth. This will mark 10 consecutive years of increases in occupancy and five consecutive years of record occupancy levels,” Woodworth said.
Likewise, STR and Tourism Economics have recognized the record-breaking streak U.S. hotels are on and have updated their joint forecasts through 2019.
Amanda Hite, STR’s president and CEO, said in a news release that industry fundamentals continue to record levels that are supported by strong demand from business and leisure travelers alike.
“Solid economic indicators and a room construction total that represents just 3.6 percent of existing supply certainly help marketplace conditions as well,” she said.