CBRE Again Boosts Hotel Forecast, Sees Rate Recovery in '22
Thanks to what it called stronger-than-expected fourth-quarter performance, CBRE Hotels Research again has upgraded its 2022 U.S. lodging forecast and now projects that occupancy, revenue per available room and average daily rate all could match or exceed 2019 levels as early as...
ShanonG
Thanks to what it called stronger-than-expected fourth-quarter performance, CBRE Hotels Research again has upgraded its 2022 U.S. lodging forecast and now projects that occupancy, revenue per available room and average daily rate all could match or exceed 2019 levels as early as this year.
CBRE in its prior forecast, in December 2021, predicted ADR would reach 2019 levels in the second quarter of 2023.
Occupancy in 2022 now is projected at 61.3 percent, an increase of 6.7 percent over the previous year and 5.3 percentage points below the 2019 level. This year’s RevPAR is forecast at $82.04, a 17.5 percent increase over 2021 and within 95 percent of the 2019 level, about six months earlier than the previous prediction.
[Report continues below chart.]
ADR is expected at $133.94 in 2022, a 10.1 percent increase from 2021. The rise is due in part to inflation. “Higher room rates will lead to a quicker return to 2019’s nominal ADR levels,” said CBRE head of hotel research and data analytics Rachael Rothman in a statement, acknowledging that “from a profitability perspective, inflation will be a headwind through higher utilities, supplies and labor.”
CBRE projects inflation, which in the U.S. was 6.7 percent in the fourth quarter of 2021, will level off at slightly more than 6 percent in 2022 before dropping to around 2 percent in 2023 and after.
Those most likely to be affected by inflation are essential and budget-conscious travelers. In a statement, CBRE senior hotel economist Bram Gallagher noted that inflation would adversely affect economy tiers more than upscale and luxury properties because the latter tiers' rates “can exceed the pace of inflation to achieve real gains. Economy hotels have the most difficulty raising prices enough to keep up.”
Other factors, such as high gas prices and low supply growth, could complicate but not unduly affect hotel recovery. CBRE projects that hotel supply will increase at a 1.2 percent compound annual growth rate over the next five years, well below the industry’s 1.8 percent long-term historical average.
