Lodging Analytics Research & Consulting (LARC) expects 2024 U.S. hotel RevPAR to increase by 1.4% to $99.56, driven by ADR growth of 1.8% to $158.65, while occupancy will decline 0.3% to 62.8%. For 2025, the company expects U.S. RevPAR to increase by 2.5% to $102.02, driven by ADR growth of 3.1% to $163.55, while occupancy will decline 0.6% to 62.4%.
The forecasts come from LARC’s 3Q-2024 Hotel Industry Outlook and Market Intelligence Reports.
LARC forecasts 2024 U.S. hotel EBITDA to decline 0.3%, with slight margin erosion, and hotel values to increase 3%. For 2025, LARC forecasts U.S. hotel EBITDA to increase 1.2%, with slight margin erosion, and hotel values to increase 2%. Over the next five years, LARC expects Hotel Values to increase a total of 10%.
September 2024 U.S. hotel industry forecast summary
The below table illustrates a summary of LARC’s current U.S. hotel industry outlook in contrast to last quarter’s outlook.
2024 U.S. hotel industry forecast: September 2024 edition vs. June 2024 edition
The vast majority of LARC’s outlook change was driven by softer 2Q 2024 results than expected. The remainder of the year is minimally changed, with RevPAR growth averaging about 1.5% for the second half of the year, which is consistent with the prior forecast. The company’s 2024 view for supply and demand both improved, driving the occupancy forecast slightly higher. The outlook for ADR slightly declined, which, combined with the improved occupancy growth outlook, drives a 0.4% decrease to the RevPAR outlook. The top-line negative revision translates to a reduction in the hotel EBTDA outlook, which in turn reduces the outlook for hotel values.
LARC’s U.S. RevPAR model has an R-squared of 98.7% with a standard error of 2.7%, back-tested to 2000. LARC’s U.S. Cap Rate model has an R-squared of 98.5% with a standard error of 26 bps, back-tested to 2005.
Market outlooks
Listed below are the best and worst performing markets based on LARC forecasts. Similar to the U.S. forecast, the market level forecasts are structured on multi-variable regression models with a high level of historical accuracy.
2024
Top markets for RevPAR growth:
Houston, Minneapolis, San Jose, Indianapolis and Seattle
Bottom markets for RevPAR growth:
Maui, Nashville, Phoenix, Anaheim and Los Angeles
2025
Top markets for RevPAR growth:
Maui, San Jose, Honolulu, Philadelphia and New Orleans
Bottom markets for RevPAR growth:
Kauai, Indianapolis, Omaha, Kansas City and Austin
Five-year outlook (2023- 2028)
Top markets for RevPAR growth:
Maui, Raleigh, Honolulu, Orlando and Sedona
Bottom markets for RevPAR growth:
Cincinnati, Austin, Savannah, Kansas City (MO) and Portland (ME)
Top markets for value change:
Las Vegas, Puerto Rico, Seattle, Orlando and New Orleans
Bottom markets for value change:
Chicago, Boston, St. Louis, San Diego and Austin