hotelAVE: Q3 TRevPAR increased 3%

According to the Hospitality Dashboard Q324 from hotelAVE, Total RevPAR for the third quarter finished up 3% versus the same period last year. However, GOP margins were down 3%, or 100 bps.

Key findings in the report include:

  • While topline growth was strong across most top 25 markets, labor costs PAR increased 5% nationally. GOP margins will continue to be stressed by above inflationary growth in labor costs.
  • Despite the two recent interest rate cuts, increases on yields of five- and 10-year treasuries negated the benefit for fixed-rate borrowers. Spreads and debt yield requirements remain stable across various debt sources as the market considers how many more interest-rate cuts remain.
  • Third-quarter growth in the OTA, GDS and wholesale channels highlights a consumer looking for value; shadow inventory performance reflects this as well. Travelers continue to spend but are searching for deals.
  • All categories of the supply pipeline in the third quarter grew versus the second quarter, and the total active pipeline is 18.5% higher versus 2023’s third quarter. Easing construction backlogs, financing support from lower interest rates, brand concessions and alternative financing sources such as CPACE and EB-5 have facilitated new starts.
  • The transaction market volumes remain muted, weighed down by high bridge interest rates, slowing fundamentals and (mainly defensive) renovation/capital expenditure requirements. The bid-ask spread is causing most owners to refinance versus sell. Business plans with identifiable value-creation strategies and brand incentives have fueled the institutional-grade trades closed this year.