CBRE Expects RevPAR Growth to Improve in H2 2024, Driven by Holiday and International Travel

CBRE expects revenue per available room (RevPAR) growth to improve in the second half of 2024, following a weaker-than-expected first quarter.

CBRE’s latest forecast projects a 2.0% increase in RevPAR growth for 2024, down from the 3.0% estimated in February 2024. RevPAR is now expected to grow by 3% for the remainder of the year, driven by international tourists, holiday travel and limited supply growth.

CBRE forecasts GDP growth of 2.3% and average inflation of 3.2% in 2024. The performance of the lodging industry is closely tied to the strength of the economy, as there is typically a strong correlation between GDP and RevPAR growth.

“We anticipate modest growth over the next few quarters, supported by a continued uptick in visitors from overseas and election-related events, such as political party conventions,” said Rachael Rothman, CBRE’s Head of Hotel Research & Data Analytics.

CBRE remains optimistic that RevPAR will achieve a nominal record of $101.20 this year, representing 115% of pre-pandemic levels in 2019. This outlook is based on projected average daily rate (ADR) growth of 1.7% and a 0.2% increase in occupancy.

“Slower RevPAR growth reflects softer demand, stickier inflation and high interest rates,” said Michael Nhu, Senior Economist and CBRE’s Head of Global Hotels Forecasting. “People have already spent a significant portion of their pandemic-era savings, and on top of that, the lingering inflationary pressures are putting a strain on discretionary spending, especially for more price-sensitive consumers."

CBRE expects muted supply growth in the medium term due to elevated financing and construction costs. For 2024, CBRE expects supply growth of just under 1%, with hotel supply projected to have a compound annual growth rate (CAGR) of 0.9% over the next three years.