The second-half growth expectations are underpinned by demand from US election-related events; easier prior-year comparisons; more inbound international travelers; widely anticipated interest rate cuts; and a slight uptick in group and business travel.
CBRE forecasts US RevPAR growing by 1.2% in 2024, down from its earlier expectation of 2.0% growth. Despite the reduced full-year expectations, RevPAR growth is expected to improve in H2 2024, increasing by 2.0% versus just 0.5% in H1 2024.
Urban and airport location hotels are set to outperform, while resort locations will continue to underperform as post-pandemic leisure travel trends normalize.
The outlook for Northern Latin America (Colombia, Costa Rica and Mexico) remains strong, with occupancy in Costa Rica this year expected to surpass its 2019 level of 67%. In Colombia, an improving economy; lower inflation, interest rate cuts; and government initiatives to bolster the hospitality sector could potentially attract more than 6 million tourists this year. Tourism in Mexico is expected to remain strong, attracting foreign investors and boosting the country’s status as a leading global tourism market.
Europe’s hotel and tourism sectors are poised for continued expansion, albeit at a more modest pace than in recent years. CBRE expects healthy growth for key European gateway cities, backed by more inbound international visitors and corporate travel. Luxury and resort locations will outperform other segments, reflecting high-income travelers’ preference for personalized experiences and reduced macroeconomic headwinds. However, after strong gains in 2023, RevPAR growth is expected to decelerate to around 5% in 2024, with the reduction primarily due to softening U.S. demand.
After continued strong growth in H1 2024, CBRE’s outlook for the Middle East's hotel and tourism industry remains positive. The first half of the year witnessed improved hotel operational performance in almost every major city across the Cooperation Council for Arab States in the Gulf (GCC). Tourism-related megaprojects were also announced in Saudi Arabia and regulatory changes in the United Arab Emirates (UAE) should bolster the hospitality sector.
Except for the Maldives, all hotel markets in Asia Pacific reported year-over-year increases in RevPAR in H1 2024. Despite ongoing challenges relating to staffing and aircraft shortages, the region has seen significant growth in airline travel so far this year.
United States
Tepid RevPAR growth continued into H1 2024, with an increase of just 0.5%. Although CBRE had expected a slowdown, growth has been more modest than anticipated, despite a resilient economy.
Headwinds such as record outbound overseas international travel; a weaker consumer; and increased competition from short-term rentals, cruise lines, and other lodging alternatives have offset the recovery in inbound international travel and modest pickup in both group and individual business travel.
Nevertheless, CBRE expects RevPAR to grow by 2.0% in H2 2024, up from 0.5% in H1 2024. Stronger momentum will be underpinned by election-related and other special events; easier prior-year growth comparisons; more inbound international travelers; and a slight uptick in both group and individual business travel demand. Given these dynamics, we expect urban and airport location hotels to outperform and resort locations to continue underperforming as return-to-office policies and pent-up demand for travel post-pandemic normalize.
On a full-year basis, CBRE forecasts RevPAR to grow by 1.2% versus an earlier expectation of 2.0%. The reduction in growth forecasts is largest for resort locations, which are now expected to experience flat year-over-year RevPAR growth, as compared with a 1.6% increase in the earlier forecast. While there is still demand for leisure travel, more Americans are vacationing in Europe and Central & Latin America and more frequently using cruise lines and short-term rentals, which continue to erode traditional hotels’ market share.
- 57: U.S. markets where RevPar has recovered to pre-pandemic levels
- 2.6%: Baseline forecast for 2024 U.S. GDP growth
Through H1 2024, RevPAR in 57 of the 65 U.S. markets tracked by CBRE had recovered to pre-pandemic levels. Most of the eight markets that have yet to fully recover are in northern California and the upper Midwest. RevPAR in major markets on the East Coast such as New York, Boston, Washington DC, Atlanta, and Miami, is now above 2019's levels.
CBRE’s baseline forecast for 2024 is for GDP growth of 2.6% and average inflation of 2.9%. After stronger-than-expected GDP growth in Q2 2024, CBRE expects the expansion to slow over the back half of 2024 and into 2025. Softening consumer spending will dampen hotel demand, as will competitive threats from lodging alternatives.
Given elevated construction and financing costs, CBRE expects modest hotel supply growth of less than 1% over the next three years. Increasing global wealth and muted supply growth will support solid hotel fundamentals in the longer term. RevPAR is expected to increase at a CAGR of 2.5% over the next five years, barring a recession or exogenous shock to the global economy. Urban hotels will outperform, with RevPAR forecasted to achieve a CAGR of 3.5%, as those locations have been the slowest to recover and stand to benefit the most from inbound international travel.
Figure 1: Americas and U.S. Hotel Performance and Key Macroeconomic Indicators as a % of 2019 Levels
Source: STR, Kalibri Labs, CBRE Hotels Research, Oxford Economics, IATA, 2024.
Latin America
Northern Latin America's (Colombia, Costa Rica & Mexico) tourism sector continues to display remarkable resilience, solidifying its position as one of the key pillars of the regional economy.
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