Intelligent Investment

US Hotels State of the Union October 2022 Edition

A Pictorial Update on Our Latest Thoughts and the Facts and Figures Influencing Our Industry

October 29, 2022 15 Minute Read

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The CBRE Hotels Research State of the Union showcases a pictorial review of current hotel trends, leading and coincident indicators of hotel demand, and an update on cost pressures and margin flow-through. The report showcases current demand trends, as well as fundamentals by segment, location type and chain scale. The report also provides a brief update on short-term rental, group business, and capital market trends, the transaction market, the impact of virtual work and the outlook for office vacancy.

Key Takeaways:

  • CBRE calls for a mild recession in 2023. GDP is expected to decline 0.2% in 2023 but rebound in 2024 to 1.9%. [Slides 5-9]
  • Unemployment remains low but is expected to increase. Hotel job openings remain 44% above pre-pandemic levels likely leading to further wage pressures. [Slides 11-17]
  • CBRE expects higher and more persistent inflation. Inflation is expected to remain above the long-run average of 2.8% through 2023.  [Slides 19-22]
  • Relative to 2019, RevPAR re-accelerated in September. Most chain scales and location types experienced post-pandemic highs. [Slides 24-34]
  • No signs of softening October MTD. TSA throughput and Google searches for future business and leisure travel continue to improve. [Slides 39,45,46]
  • Group, GDS, and brand.com are gaining share. OTA trends are at 100% of 2019 while brand.com remains 8% above pre-pandemic levels.  [Slides 36,37]
  • GDP growth and RevPAR growth are closely aligned. A decline in GDP is likely to result in a pullback in RevPAR growth in 2023.  [Slides 7]
  • Credit spreads have widened since before the pandemic. 10-year treasury yields increased 176 bps, and credit spreads widened 224 bps, on average. [Slides 73-76]
  • The inflationary environment is leading to margin pressures. August GOP margins declined 141 bps year over year. [Slides 56-60]