CBRE (NYSE: CBRE) is predicting an improvement in revenue per available room (RevPAR) growth during the second half of 2024, following a weaker-than-expected first quarter.
The company’s latest forecast projects a 2.0% increase in RevPAR growth for 2024, down from the 3.0% estimated in February 2024. In the updated forecast, RevPAR is now expected to grow by 3% for the remainder of the year – with the expansion being fueled by international tourists, holiday travel and limited supply growth.
CBRE added that it expects RevPAR to achieve a nominal record of $101.20 this year, representing 115% of pre-pandemic levels in 2019. This outlook is based on projected average daily rate growth of 1.7% and a 0.2% increase in occupancy. The second half of the year is expected to include muted supply growth in the medium term due to elevated financing and construction costs.
Furthermore, CBRE is forecasting GDP growth of 2.3% and average inflation of 3.2% this year. Because of the close ties in strength between the lodging sector and he economy, there is typically a strong correlation between GDP and RevPAR growth.
“Slower RevPAR growth reflects softer demand, stickier inflation and high interest rates,” said Michael Nhu, senior economist and CBRE’s head of global hotels forecasting. “People have already spent a significant portion of their pandemic-era savings, and on top of that, the lingering inflationary pressures are putting a strain on discretionary spending, especially for more price-sensitive consumers.”
