The national hotel industry has seen a slight decline in revenue and growth, a pattern that has been in play throughout most of 2023, according to a new report.
The real estate analysis service CRBE is reporting that overall hotel revenue softened during the second quarter of this year “amid tepid demand.”
This weaker performance, said the report, has been driven by “more Americans electing to travel overseas at a time when inbound international travel has recovered only modestly.”
Adding to the challenge: a 12.5% increase in “short-term rental demand, resurgent cruise ship bookings, and the depletion of excess consumer savings.”
The revenue drop-off has seen both economy and midscale hotels hit with declines of 4.4% and 1.6% respectively.
But for all of that, the report predicts that urban-based hotels remain the best poised for future growth, with revenue between now and 2027 set to increase on a 5.5% annual basis, and resort properties also poised for revenue increases.
“Urban markets, such as New York, Chicago, and Washington DC, are expected to exhibit healthy growth this year and next,” the report asserts, “especially compared with markets that have already recovered, such as Charleston and Savannah.”
An industry growth rate of just under 4% may well be achieved next year due primarily to “stronger inbound international travel from Asia-Pacific, as visa delays and airlines’ long-haul capacity improves, along with continued improvements in business and group travel.”
Downward pressures on the market include ongoing higher interest rates as well as increased oil prices, and both the “burndown of excess savings and resumption of student loans payments.”
Despite this year’s rather flat occupancy numbers, the hotel industry continues to see a growth in construction projects. In a survey released several months ago, Lodging Econometrics showed that more than 1,000 new hotels were in the process of being built, representing a total of 140,300 rooms.
Those figures for the early part of this year comprised a 9% increase over the construction picture for the same period of time in 2022.
By Garry Boulard
