CBRE: US accommodation demand expected to return to pre-pandemic levels by Q4 23
Based on a stronger than expected performance in the first quarter of 2021, along with encouraging economic and vaccine news, CBRE Hotels Research predicts that demand for accommodation in the United States will return to pre-pandemic levels. ‘by the fourth quarter of 2023.
Strong accommodation demand will support prices, but occupancy gains will be somewhat offset by new supply as fewer development and conversion projects have been set aside than expected. As a result, the upturn in occupancy will not occur until the fourth quarter of 2025 due to greater supply growth over the 2020-2022 period than after exiting previous recessions. The net result is a return to RevPAR 2019 levels in the third quarter of 2024.
According to the June 2021 edition of Hotel Horizons’ CBRE Hotels Research, ADR for U.S. hotels will return to 2019 nominal levels by the first quarter of 2024. This follows only a quarter of the recovery in demand. accommodation. After suffering a 22.5% drop in ADR in 2020, American hoteliers are seizing the opportunity offered by the rebound in demand by maximizing room rates as much as possible. CBRE forecasts a 4.3% increase in ADR for the whole of 2021, followed by a sharp 11.4% increase in 2022. Previous research shows that strong growth in ADR helps improve flows, supporting a recovery after the 80% drop in gross operating profits suffered. Last year.
“We are encouraged by the rate of growth in demand so far in 2021, not only for hotels, but also for air travel, rental cars and alternative forms of accommodation,” said Rachael Rothman , Head of Hotel Research and Data Analysis, CBRE. . “There is clearly a pent-up desire to hit the road again, especially for leisure travel. Anecdotally, we are seeing the first signs of improvement in group travel, but the overall pace of the recovery in group travel and business travel is less certain at this point. “
A headwind to strengthening demand is an expected increase in housing supply of 2.1% for 2021. Most of the properties that closed in 2020 have chosen to reopen in response to accelerating growth in demand. At the same time, delays in the delivery of furniture, fixtures and equipment, as well as labor shortages in construction, have pushed the opening and reopening of new and renovated properties this year.
When examining the chain-scale recovery models, the influence of supply growth becomes more evident. With the exception of the high-end segment, the scales in the chain that are expected to experience the largest supply gains will lag behind in recovering RevPAR.
Market recoveries vary
“Local market factors are increasingly influencing the projected performance of US hotels,” said Rothman. “In general, properties in smaller, remote and resort markets have suffered less and are on the cusp of returning to pre-pandemic levels more quickly. On the other hand, larger, urban and gateway markets, which are more dependent on inbound international visitors and group demand, will lag behind in the recovery. “
In 2021, hotels located in San Bernardino, California; Dayton, Ohio; Virginia Beach, Virginia; Jacksonville, Florida; and St. Petersburg, FL, are expected to achieve an average market RevPAR of 80% or more of their respective 2019 RevPAR levels. Conversely, the recovery of New York and San Francisco hotels will be extended. Hotels in these markets are expected to achieve RevPAR below 40% of their 2019 levels in 2021.