Citing effects of a weaker-than-expected first quarter andpersistent inflation harming lower-tier demand, STR and Tourism Economicssubstantially diminished their projection for 2024 U.S. hotel occupancy, ratesand revenue, the companies announced Monday. Still, executives said some datapoints suggest business travel demand remains sturdy.
The upscale and upper upscale segments that have remained strong and will remain strong the rest of the year, that is group travel and continued improvement in transient business travel."
- STR's Amanda Hite
STR now projects full-year 2024 U.S. occupancy of 62.8percent, markedly lower than the 63.6 percent thecompany forecast in January, its most recent, and also lower than the 63percent recorded in 2023. U.S. 2024 average daily rate now is projected toincrease 2.1 year over year, down from the 3.1 percent forecast in January.Revenue per available room now is forecast to increase 2.0 percent year overyear, down from the 4.1 percent projected in January.
"It's a pretty significant downgrade," STRpresident Amanda Hite said Monday during a panel at the New York University's InternationalHospitality Industry Investment Conference in New York. "It's reallydriven by the horrible first quarter that we had in demand declines."
Hite said the revised forecast came after hotel demandgrowth undershot U.S. gross domestic product growth, historically unusual asthe metrics typically correlate closely. Hite pointed to persistent inflationthat could be affecting lower- and middle-income Americans interest in travelspending and noted that the upper upscale and upscale tiers significantlyoutperformed the midscale and economy tiers.
She suggested that bifurcation between the performance ofhigher and lower tiers would continue for the rest of the year.
That stronger upper-tier performance is a sign that businesstravel demand remains durable, Hite told BTN.
"The upscale and upper upscale segments that haveremained strong and will remain strong the rest of the year, that is grouptravel and continued improvement in transient business travel," Hite said."If you look at the data in May, we have improvement and demand growth onweekdays, and that's mostly centered in top 25 markets," adding thatweekday improvement is a traditional sign of strengthening business traveldemand.
STR and Tourism Economics for full-year 2025 projected U.S.hotel occupancy of 63.2 percent, with ADR increasing 2 percent year over yearand RevPAR increasing 2.6 percent.
