According to CBRE Hotel Research’s U.S. Hotels State of the Union for February, RevPAR pulled back in January, falling to 31.3% of 2019 levels. However, things have started to improve in February.
The CBRE Hotels Research State of the Union showcases a pictorial review of current hotel trends, leading and coincident indicators of hotel demand and an update on cost pressures and margin flow-through. The report provides a brief update on capital market trends, the impact of virtual work and office vacancy, as well as the company’s revised chain scale, national and market-level forecast summaries.
Key findings:
- Recent travel trend data and leading indicators indicate that trends should improve over the near term.
- The reopening of the U.S. border in November has led to strong gains in inbound international travel, with many gateways reaching or exceeding their 2019 levels in December; however, there is still material runway for growth in 2022 and expect markets like New York, San Francisco (shown above), Miami and Los Angeles to continue to benefit.
- Both OTA and brand.com have essentially recovered to pre-pandemic levels. Group and corporate travel remain the laggards.
- Operating efficiencies observed during the summer of 2021 waned during the back of the year. December 2021 GOP levels exceeded 2019, but full-year 2021 GOP came in 35.5% below 2019.
- Stronger GOP levels resulted in a nearly 50% reduction in CMBS delinquency from December 2020 to December 2021.
- Short-term rental market share has normalized as hotels have reopened. Large units in southern and drive-to destinations are driving revenue growth.
- 2022 GDP estimates have been negatively revised and rate increases could be a headwind, but an optimistic labor outlook and the “return to office” should support further RevPAR gains.
- Hotel construction expenditures continue to pull back and input cost increases will remain headwinds to incremental supply growth, boosting investor appetite for existing assets.