CBRE: RevPAR recovery continues to vary by chain scale

According to CBRE Hotel Research’s U.S. Hotels State of the Union for December, RevPAR through October ranged from mid-60% of 2019 levels for luxury hotels and close to 110% for economy hotels.

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 chainscale, national and market-level forecast summaries.

Key findings:

  • The macro tailwinds continue to offset COVID headlines and infection rates.
  • By location type, RevPAR at interstate hotels are +110% of 2019’s levels, while urban hotels are performing at roughly 65% of 2019’s levels.
  • Large convention markets continue to lag, while smaller ones are showing strength.
  • Public transport did not trail off despite return to school or the Delta variant. Air passenger counts held steady and have shown recent strength owing to the resumption of international travel and Thanksgiving.
  • Most corporate and personal leading indicators continue to show improvement, with particular strength in luxury and all­-inclusive resorts.
  • Virtual work, office vacancies, limited international travel and short-term rentals remain headwinds.
  • Supply growth by market varies widely from a 2%+ decline to nearly 7%. Increasing construction cost inputs, supply chain disruptions and wage inflation will lead to lower supply growth coming out of the downturn.
  • Wage rates and job openings remain challenges, but gross operating profit is surprisingly strong outside of convention hotels.
  • Delinquencies and special servicing rates continue to decline but remain well above pre-pandemic levels.