March 2, 2024

BASS

Booking Travel

Analysts express cautious optimism for U.S. hotels in 2024: Travel Weekly

LOS ANGELES — At this year’s Americas Lodging Investment Summit (ALIS), industry insiders are saying that the U.S. hotel industry’s prospects look fairly encouraging.

But with some tailwinds potentially losing steam and headwinds on the horizon, they also say that a level of uncertainty exists.

During a Monday panel discussion centered on future performance expectations, Laura Resco, director of hotel intelligence for the Americas at HotStats, told the audience that there are two major “wild cards” that could impact performance in 2024: geopolitical instability and the presidential election.

“When you have election years, things become a little bit more uncertain,” said Resco. “The general business environment becomes a little bit more uncertain and consumer confidence [does] as well.”

Ryan Meliker, president of Lodging Analytics Research & Consulting, described his outlook as “relatively positive,” citing healthy levels of group demand and some improvement in foreign inbound leisure travel. (Foreign inbound leisure demand, however, still lags well behind 2019, with Meliker reporting that in 2023, international visitor arrivals were still down 16% from 2019.)

Where Meliker sees concern, however, is a lagging recovery in corporate travel and the possibility that domestic leisure demand could wane as U.S. travelers continue to favor international trips.

“We saw there was a lot of pent-up demand for traveling overseas, and in 2023, U.S. citizens went abroad at a level 11% above where that level was in 2019,” said Meliker. 

Meliker also warned of a potential “weakening” U.S. consumer.

“When there’s caution surrounding the outlook from the U.S. consumer, they save more and spend less,” said Meliker. 

STR president Amanda Hite took a somewhat sunnier stance, pointing to the hotel industry’s record-high levels in revenue per available room (RevPAR) and average daily rate (ADR) and last year’s better-than-expected economic landscape.

Although Hite conceded that the U.S. is likely to see some level of economic slowdown this year as well as some moderating rate growth, she predicts that the U.S. traveler will remain resilient. 

“We think the travel economy is going to fare a whole lot better than the general economy this year,” said Hite. “The employment level of college-educated professionals continues to grow, and when you look at households earning $100,000 or more, those are the people who are prioritizing travel spend.” 

Hite unveiled STR’s latest U.S. hotel industry forecast, which remained largely unchanged from the group’s previous forecast.

For 2024, STR forecasts that occupancy will be relatively flat, coming in at 63.6%, while ADR is projected to grow 3.1%. RevPAR is anticipated to be up 4.1%. 

Cindy Estis Green, CEO of Kalibri Labs, said that her outlook was generally in line with STR’s, though she emphasized that corporate travel’s stunted recovery continues to weigh on overall industry performance.

“The leisure demand is still there and the strength of the rates is actually coming from the leisure side of the equation,” said Estis Green. “So that’s a good thing. But we don’t know how sustainable it is. This is the type of business we’re not as familiar with as the commercial business that we’ve kind of lived off of for so many years.”

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