US Hotels State of the Union February 2023 Edition

Key Takeaways:

• Economy

  Personal savings rate increased for the eighth consecutive month.
  Personal savings rate continued to increase in January to 4.7% up from the low of 2.7% in June 2022.
  
  Job openings per hotel increased in December.
  Job openings per hotel increased to 30 in December near the all-time high of 31 in December 2021. This is consistent with the trend in national job openings.
  
  Hotels continued to face wage pressures in January.
  Hotel wages increased 7.2% in January, higher than the 4.6% increase in retail wages. Labor shortages suggest wages will remain elevated.                

• Current Trends

  GOP margins contracted again in December.
  Higher labor and utility costs impacted GOP margins for the seventh straight month. Despite margin contraction, profit dollars increased 7% Y-o-Y.
  
  Office attendance continues to lag.
  Following the holiday period, office attendance failed to reach 50% in February and is below October 2022 levels.
  
  RevPAR relative to 2019 levels was steady. 
  January RevPAR increased 26% Y-o-Y owing to easier Omicron comparisons in 2022, relative to 2019 RevPAR trends which remained consistent at 106%.

• Food for Thought

  CBRE raises RevPAR estimate for 2023.                                                
  With RevPAR recovered to 2019 levels in 2022, CBRE increased its 2023 RevPAR estimate by $0.43 to $97.46 a 5.8% increase Y-o-Y.
  
  Post-pandemic credit spreads have widened 145 bps.               
  While profits have increased, interest rates and spreads continued to widen in January.
  
  Real consumer credit is below pre-pandemic highs.
  Contrary to popular narrative, real consumer credit levels remain below pre-pandemic highs representing 6.7% of real personal disposable income