U.S. Hotels State of the Union December 2022 Edition

Key Takeaways

OUTLOOK

• CBRE raised RevPAR growth in 2023 from 5.6% to 5.8%. RevPAR growth will be fueled primarily by a 4.2% increase in ADR and a 1.6% increase in occupancy.
• Employment remains strong. Unemployment remained steady at 3.7% in November and is expected to increase further in 2023.
• CBRE expects higher and more persistent inflation. Inflation is expected to remain above the long-run average of 2.8% through 2024.
  
  

CURRENT TRENDS

• RevPAR fell slightly as a percentage of 2019 in October. Most chain scales and location types experienced a slight pullback from post-pandemic highs as a percentage of 2019.
• Search trends softened in November. Google searches for future business and leisure travel pulled back in November. TSA throughput pulled back slightly.
• Transaction pricing remains stable. Transaction price per key for limited-service and full-service remained relatively stable despite increasing interest rates.

FOOD FOR THOUGHT

• The personal savings rate is near historic lows. As consumer credit card balances continue to climb, the personal savings rate is 2.3%.
• Profit increases are mitigating the rise in interest rates. Credit spreads have widened since before the pandemic from 240 bps to 386 bps, on average, while GOP margins are mostly exceeding 2019.
• International travel continues to drive growth. The mid-October reopening of Japan and continued easing of travel restrictions in China should fuel growth in 2023.

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