How the US hotel market is performing: CBRE analysis
The US hotel market is in decline, particularly in the midscale and economy segments. CBRE experts predict a slowdown in this sector from 2023. However, they forecast an increase in activity by the end of 2024.
Despite the results in the economy segment, the slowdown has not affected luxury hotels. Here, the results in 2023 were as follows:
– 4.6% increase in profitability;
– the profitability of a room in such complexes across the country increased by an average of 3.2%;
– the price of a day’s stay rose by almost 3% compared with 2022 rates.
Analysts predict a recovery in the hotel sector, particularly for premium complexes. Increased international travel and activity in the tourism sector drive demand.
Experts expect the profitability of luxury hotels to reach 3.8% by the end of 2024. However, it is also important to consider the impact of competitors, which in this case include short-term rentals and cruise lines.
Since the beginning of this year, city hotels have shown good momentum. The number of foreign tourists is growing, contributing to an increase in the occupancy rate. This indicator has risen by 1.1% and continues to grow.
Overview of the hotel market situation in different locations
In 2023, the hotel sector’s profitability increased in several cities, mainly New York and San Diego. At the same time, hotels in California and the Pacific Northwest showed the worst results.
According to CBRE forecasts, US hotel revenues will grow by 3% in 2024, and these positive trends will continue.
Tourism in the Caribbean is showing good momentum. Government support and an increase in traveller numbers have contributed to this. The result has been an increase in the profitability of the local market, which has also had an impact on the number of passengers at airports:
1. Puerto Rico’s arrivals increased by more than 18%;
2. Punta Cana airport received 13.4% more passengers in 2023 than in 2022;
3. Jamaica’s and Aruba’s airports saw a 10% increase in travellers.
These figures for the region’s main terminals are already above pre-pandemic levels in 2019.
Mexico, the US neighbour, is also seeing an increase in hotel activity. For 2023, the country forecasts around 37 million tourist arrivals, more than 10% higher than the 2022 figure. However, despite the recovery, the market has yet to reach 2019 levels.
The hotel sector generated around US$27 million in revenues, 24% higher than in the pre-COVID period. Room occupancy reached 60%, still below the 2019 performance.