Economic uncertainty to likely impact hotel performance through 2025
Continued economic uncertainty, an upcoming election and continued geopolitical tensions are expected to impact hotel performance in the US through 2025
Since its last issue of Hospitality Directions US in November, PwC has seen two additional quarters of decline in hotel occupancies, for a total of four, but expect to see a gradual rebound the balance of this year and into next, off of easier comps. That said, the company expects average daily rate growth to trail PCE inflation through the rest of this year and 2025.
Key takeaways
- However, with inflation through Q1 remaining elevated relative to the Fed's expectations, S&P Global now predicts that a meaningful reduction in rates will not occur until December 2024;
- For the remainder of 2024 and into 2025, the outlook for markets reliant on individual business travel remains uneven with substantial deviation in office attendance across different metropolitan areas;
- Outbound international leisure travel is expected to continue to outpace inbound, given the relative strength of the dollar;
- Both occupancies and room rates are expected to experience only marginal growth in 2025, with an expected year-over-year, below-inflationary increase in RevPAR of 0.7 percent – reaching approximately 117 percent of pre-pandemic levels.
Get the full story at PwC