STR Expects Hotel Revenues To Grow Even in Recession

U.S. hotel industry revenues have never grown during an economic recession, but Tourism Economics and CoStar's hospitality analytics firm STR is projecting just that to happen in 2023.

In his monthly video analysis of U.S. hotel performance, CoStar's National Director of Hospitality Market Analytics Jan Freitag said that projection is, in a word, "unprecedented."

Tourism Economics "is projecting that there will be a slowdown in GDP growth in 2023," he said. "The slowdown will be mild, only a 0.5% GDP contraction, and therefore the recession will be mild as well. And because of that, [hotel average daily rate] and [revenue per available room] growth are actually still positive in 2023. The growth rates were cut, but still 3% expansion on record-high rates is not nothing and RevPAR continues to grow, as well."

Close to Pre-Pandemic Performance

U.S. hotel room demand in October was within 3% of October 2019 levels — which Freitag described as roughly flat in that comparison — but RevPAR was up 23% year over year.

He said he doesn't expect a recession to derail the rebound of leisure, corporate and group hotel demand, but "it could slow it."

"The number of group rooms sold was 8.9 million for luxury and upper-upscale class hotels, and that's also basically back to the October 2019 number," he said. "The difference equates to just around 3%, as well. It will be very interesting to see what impact, if any, a mild recession will have on this chart."