STR updates 2023 US hotel forecast

STR (formerly Smith Travel Research) and Tourism Economics have released their final 2023 growth projections for US hotel key performance indicators.

Stronger group activity and returning international visitors have at least somewhat offset negative economic factors, and have supported RevPAR growth in 2023.

The new year-on-year 2023 growth forecast numbers:

• RevPAR +4.8%
• ADR +4.2%
• Occupancy +0.6%

However, 2023 RevPar is projected to be 5.4% below 2019 actual.

Comments from STR/TE:

• Rate continues to be the primary driver of performance.
• Long-term average trends are beginning to stabilize.
• Projections reflect the "continued buoyancy of travelers."
• Last previous projection assumed a mild recession which didn't materialize.
• Expect to see continued growth in RevPAR in 2024.

And, in the context of US economic outlook:

"The latest economic outlook calls for a stalling economy with growth well below the levels seen toward the end of the pandemic. Despite the potential dip, we see strong traveler fundamentals, including low unemployment among college-educated individuals, an increased volume of households above $100k in income, a rise in real personal disposable income, and a somewhat stable corporate environment. The projected increase in ADR will result in higher TRevPAR, which combined with less spend on labor, lifts our expectation for GOP as well. The gap in hospitality employment levels coupled with increased operational efficiencies brought down our labor cost forecast.”

“Decelerating factors, including higher interest rates, more restrictive lending, tighter fiscal policy, and weakened household finances will lead consumers to rein in spending and firms to cut back on hiring and investment, likely causing the economy to skirt with recession,” said Aran Ryan, director of industry studies at Tourism Economics, “Travel sector improvements, including stronger group activity and returning international visitors, will help offset economic factors, supporting still-solid RevPAR gains.”

About STR and Tourism Economics:

STR has been providing benchmarking, analytics and market insights for the hospitality industry since 1985, with a presence in 15 countries. Tourism Economics, an Oxford Economics company with a worldwide client base, provides actionable insights into the intersection of the economy and the travel sector.