Based on stronger than expected performance during the first quarter of 2021, plus encouraging economic and vaccination news, CBRE Hotels Research forecasts U.S. lodging demand will return to pre-pandemic levels by the fourth quarter of 2023, according to Lodging.
The strength in U.S. lodging demand will support pricing, but occupancy gains will be somewhat offset by new supply, as fewer development and conversion projects were sidelined than previously forecasted. As a result, the recovery in occupancy will not occur until the fourth quarter of 2025 due to greater supply growth during the 2020 — 2022 period than coming out of prior recessions. The net result is a return of 2019 Revenue per available room (RevPAR) levels in the third quarter of 2024.
“We are encouraged by the pace of demand growth so far in 2021, not just for hotels, but for air travel, rental cars, and alternative forms of lodging, as well,” said Rachael Rothman, head of hotels research and data analytics for CBRE. “Clearly, there is a pent-up desire to get back on the road, especially for leisure travel. Anecdotally, we are seeing early signs of improvement in group travel, but the overall pace of the recovery in group travel and corporate travel is less certain at this point.”
In 2021, hotels located in San Bernardino, Dayton, Virginia Beach, Jacksonville, and St. Petersburg are forecast to achieve a market average RevPAR of 80% or more of their respective 2019 RevPAR levels. Conversely, recovery for hotels in New York and San Francisco will be extended. Hotels in these markets are projected to achieve RevPAR less than 40% of their 2019 levels in 2021.