STR Boosts its Predictions for U.S. Hotel Rates in 2023

Facebook
X
LinkedIn
Email

STR and Tourism Economics have raised their estimates for the average daily rates and revenue per available room in the U.S. hotel industry for 2023. Despite concerns about a mild recession and lower projected occupancy growth compared to their previous forecast, the companies are anticipating slightly higher figures. The updated projections indicate that the average daily rate (ADR) will be approximately $151.10, representing a 2.1 percent increase over 2022 levels, and the revenue per available room (RevPAR) will be $96.44, reflecting a 3.7 percent increase over 2022 levels. These expectations are slightly higher than their previous forecast released in November.

In terms of occupancy rates, the companies predict a rate of 63.6 percent for 2023, which is slightly lower than their prior forecast but higher than the 62.7 percent recorded in 2022.

Tourism Economics director of industry studies, Aran Ryan, referred to an Oxford Economics forecast of a “mild recession” in a statement, explaining that they anticipate a slowdown in lodging demand growth. However, they expect the growth to remain positive year-over-year as group events and international travelers resume, and leisure travel continues to be a priority for households.

During a panel discussion at the Americas Lodging Investment Summit in Los Angeles, STR president Amanda Hite stated that they expect a strong first quarter in 2023, particularly when compared to the travel disruptions caused by the COVID-19 pandemic in the first quarter of 2022. However, Hite mentioned that demand may slow down in the second quarter. Despite the potential for a recession, Hite added that STR projects significant performance growth in 2023. She also noted that while gains might be slowing, the industry’s demand remains robust due to the substantial return of group business. Hite believes that the industry is well-positioned to return to the year-over-year benchmark, as the comparables from the pandemic calendar are no longer a factor.

Looking ahead to 2024, STR and Tourism Economics project a U.S. occupancy rate of 65.3 percent, slightly lower than their previous forecast but higher than the projected 2023 levels. They anticipate a 3.8 percent increase in ADR from 2023 and a 6.6 percent increase in RevPAR, which is slightly less than their previous forecast.

MEET

For 20+ years, the MEET family of products have provided regional and national resources that have kept corporate, association, medical, education, independent, and religious meeting and event planners informed about relevant vendors, industry news, tech innovations, and resources that impact and influence how and where they plan their group business.

Latest Industry Insights