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| R. Mark Woodworth |
ATLANTA, GA -– Shifts in the depth and timing of an expected slowdown in the nation’s economy have impacted CBRE Hotels Research’s outlook for the U.S. lodging industry over the next few years.
According to the September 2019 edition of Hotel Horizons®, CBRE’s forecasts for RevPAR changes in 2019 and 2020 have been adjusted slightly downward, but the outlook for 2021 has improved.
“Changes in various components of the U.S. economy and their relationship to U.S. hotel demand fluctuations are well understood," said R. Mark Woodworth, senior managing director, CBRE Hotels Research.
"This is what drives the econometric model that informs our forecasts for U.S. lodging market performance. As a result of the rapidly changing prospects for the nation’s economy, we have adjusted our forecasts of lodging demand and ADR appropriately.”
CBRE projects GDP growth to average 1.9 percent during the second half of 2019. This is half the pace of growth during the first half of the year.
Accordingly, CBRE Hotels Research forecasts a deceleration in U.S. lodging performance during the final six months of 2019. After rising by 2.1 percent during the first half of the year, the pace of demand growth will slow to 1.4 percent for the balance of 2019.
As a result, CBRE now forecasts the national occupancy level to decline by 0.2 percent from 2018 to 2019.
“Fortunately, room rates alterations tend to lag occupancy changes. Therefore, the annual increase in ADR will remain steady at 1.1 percent,” said Woodworth. For the year, CBRE is now projecting a RevPAR increase of just 0.9 percent, 110 basis points below the forecast the firm published in June of 2019.
The 2019 demand slowdown will show its negative impact on ADR next year. CBRE’s forecast for ADR growth in 2020 has been lowered to 2.0 percent.
“Downward pressure on room rates also will come from a rise in new hotel openings,” Woodworth added. “Our 2020 supply growth forecast now is 2.1 percent, which is greater than the long-run average of 1.8 percent.
"This will drive a 0.8 percent national occupancy rate decline for the year.” For 2020, CBRE is forecasting a RevPAR growth rate of 1.2 percent. This, too, is a downward adjustment from 90 days ago."
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DALY GRAY PUBLIC RELATIONS, INC.
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Chris Daly
Daly Gray Public Relations
703 435 6293
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