2024 has been a turbulent year thus far as we have witnessed dramatic national and global events that may very well alter the course of history. During this past quarter alone:
Throughout the latter part of the 20th century, golf was growing significantly in the United States. Not only was participation soaring, but new golf courses were being built at a record pace. In some years, development activity exceeded 400 new courses.
Lower inflation, continued job creation, and the anticipated benefits of the recent cut in the federal funds rate provide a foundation for optimism about the U.S. economy. In the lodging sector, as different markets and segments continue to post varying results, we anticipate the overall trend of positive, albeit muted, growth to persist in the near term.
For Denver hotels, the first five months of 2024 were somewhat volatile, with March declines being offset by April gains. This trend can be partially attributed to Easter falling in March this year. After two months of RevPAR declines in Denver in June and July, August was a stellar month for the city’s hotels, with the RevPAR increase nearing 10%. However, the declines in June and July resulted in little growth for the city in the summer of 2024, as overall RevPAR growth through August is less than 0.5%.
Parking revenues have increased by 23.1% from 2019 to 2023, based on a sample of U.S. properties in CBRE’s Trends® in the Hotel Industry database, which is more than four times greater than the growth rate for total hotel revenues during that period. Not only is parking a growing source of revenue, but it is relatively profitable as well. In 2023, parking department profit margins for the CBRE sample were 61.3% of total department revenue, while the average profit margin for all other-operated departments was 58.7% at those hotels.
Since the COVID-19 pandemic, San Francisco has been navigating a difficult recovery affected by multiple issues, from safety concerns to a weak convention calendar. However, the long-term outlook remains cautiously optimistic given the growing presence of AI companies and major sporting events planned for 2026.
Newark, New Jersey, has been undergoing gradual revitalization efforts during the last roughly 15 years. The city has been gaining recognition given the ease of access to Manhattan and within New Jersey, the newly renovated Newark Liberty International Airport, and waterfront areas along the Passaic River and Newark Bay.
The volatility of markets over the last few days has raised important questions about economic health globally, for the U.S. and for the travel industry. The U.S. Bureau of Labor Statistics released employment figures for July that showed fewer new jobs created than prior months, and an increased unemployment rate of 4.3%.
With Pittsburgh recently announced as the host city for the 2026 NFL Draft, we take a look at the impact of previous drafts on both the host cities and area hotels.
Despite the Federal Reserve's aggressive monetary policy aimed at controlling persistent inflation, during the first half of 2024, the U.S. economy continued to demonstrate resilience. While strong growth in many subcategories of Gross Domestic Product (GDP) including consumer and government spending, investment, exports, and employment has many optimistic, the economic outlook is tempered by global geopolitical risks including ongoing wars in Europe and the Middle East.
A midyear snapshot of performance in the top 65 markets in the US indicates that on a trailing 12-month basis through May, RevPAR is up slightly year over year (due to slight increases in both occupancy and ADR) and this is largely driven by increases in the top three chain scales: luxury, upscale and upper upscale. Interestingly, the remainder of the US markets are slightly down year over year. Most secondary and tertiary markets have a higher concentration of midscale and economy-oriented inventory that caters to a more budget conscious travel; a consumer base that has been disproportionately impacted by the high inflationary environment. The new supply pipeline remains steady but considerably lower than long term historical averages as construction costs, and to a lesser degree interest rates, continue to suppress new construction.
The Cincinnati lodging market is gearing up for an influx in demand fueled by the renovation of the Duke Energy Convention Center. Moreover, recent success and changes in the city’s diverse sports scene are drawing visitors from near and far.
As a border town, Buffalo has historically been heavily reliant on Canadian visitors and U.S. travelers stopping over en route to/from Canada for lodging demand. Based on a recent hotel market study and many hotel appraisals in the greater Buffalo-Niagara area I have performed, it is clear that traffic volume at the land crossings has an impact on these border markets. Below is a brief timeline of the changing restrictions for border crossings from 2020 until 2023.
Prior research conducted by CBRE Hotels Research revealed that hotel management companies were rewarded handsomely as the U.S. lodging industry recovered from the COVID-19 pandemic. An analysis performed by CBRE in April 2023 found that total hotel revenue increased by 153% from 2020 to 2022, while Gross Operating Profits (GOP) grew by 437%. This resulted in a 68% increase in the fees paid to management companies and brought management fees back to pre-pandemic levels. The increases in fees were largely due to the improved performance of U.S. lodging properties, which in turn triggered the payment of incentive management fees.
Mixed messages abound these days, comprising some bright spots, some not so bright spots, and some challenges. With no coherent theme, the greatest challenge may be developing a forecast for the industry as a whole. But we are undaunted and herewith present our current expectations for the U.S. lodging industry.
Ocean City, Maryland, known for its expansive beaches and boardwalk, welcomes millions of visitors annually. This robust tourism industry fuels a thriving hospitality market, and recent strategic investments underscore Ocean City's focus on providing exceptional experiences for all visitors.
Only the Midwest, South Atlantic, and West South-Central regions posted moderate single-digit hotel-price gains in the first quarter 2024 (Midwest, 3.2%; South Atlantic, 3.8%; and West South-Central, 1.6%). Hotels in gateway cities experienced a reversal, exhibiting better performance than hotels in non-gateway cities this quarter. Transaction volume fell year over year and quarter over quarter for both large and small hotels in gateway and non-gateway cities. Standardized prices of large hotels continue to soften while those of smaller hotels remain relatively stationary. The cost of hotel debt financing and the delinquency rate for hotels rose in the recent quarter, even though credit spreads continued to tighten and relative risk narrowed. As in prior periods, borrowing costs still exceed the return on hotels. Expect to see a rise in the price of large hotels and a decline in prices for small hotels next quarter based on our leading indicators of hotel price performance.
While the U.S. economy continues to expand and is currently a major driver of global growth, inflation has recently ticked up after falling considerably from a peak of 9.1% nearly two years ago. Many now perceive that in the near term, the U.S. Federal Reserve will not reduce borrowing costs, and some anticipate a resumption of raising rates by early 2025. Unless a severe economic downturn occurs, interest rates are likely to remain relatively elevated for an extended period. A tight labor market and strong household net worth has led to remarkable resilience in U.S. consumer spending as Americans continue to enjoy experiences and travel. With this said, modest employment growth is anticipated as companies in certain industries are reducing headcounts while others are scaling back hiring.
Each year, Ponte Vedra Beach in the greater Jacksonville, Florida, area hosts THE PLAYERS Championship at TPC Sawgrass. The event, often referred to as “golf’s fifth major,” is an annual tournament on the PGA Tour and offers the largest purse of any regular-season PGA Tour event. A University of North Florida study completed in 2015 estimated the total economic impact of the event in Duval and St. Johns counties at over $40 million. The 2024 edition, held March 11–17, marked the event’s 50th anniversary; a record-setting $25-million purse was offered, with $4.5 million claimed by this year’s winner, Scottie Scheffler.
Las Vegas continues to evolve, with billions of dollars being spent on the development of new world-class venues in recent years. In 2023, occupied room nights, as well as total occupancy (83.5%), continued to lag 2019 performance; however, like gaming revenue, the market’s ADR ($191.29) and RevPAR ($159.73) for 2023 reached record levels for the second year in a row. This article examines the latest trends and developments that are relevant to the Las Vegas casino and hotel markets.