LARC Revises RevPAR Projection and Anticipates Gradual Increase in Corporate Travel

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Lodging Analytics Research & Consulting (LARC) has revised its estimate for the growth of revenue per available room (RevPAR) in U.S. hotels for 2024 downwards, indicating an increase of 2.6 percent year over year. This adjustment is lower than their previous forecast, issued in December, which predicted a 3.6 percent increase. The firm also anticipates a slight decline in occupancy by 0.5 percent compared to its earlier projection of a 0.8 percent increase. However, the average daily rate is expected to rise by 3.1 percent, up from the earlier forecast of 2.8 percent.

According to LARC’s report released on Friday, the downward adjustments in occupancy and RevPAR are attributed to several factors including a slowdown in the domestic leisure market due to persistent inflation, soft consumer confidence, geopolitical tensions overseas, and the upcoming U.S. presidential election. LARC highlighted the impact of geopolitical risks related to conflicts in the Middle East and Ukraine, as well as uncertainties surrounding the presidential election, which may prompt both consumers and businesses to limit their spending in 2024. In the past four presidential election years, both demand growth and RevPAR growth slowed from the previous year.

Despite these challenges, LARC remains optimistic about the growth of corporate transient business in 2024.

Ryan Meliker, the president of LARC, mentioned at the Americas Lodging Investment Summit in January that the gradual return of employees to corporate offices continues to impede business travel volume, a trend that is not expected to change significantly this year. LARC anticipates a slow but steady improvement in corporate transient demand alongside positive economic growth, although this growth may be constrained by the sluggish return to office-based work environments.

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