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North America

CBRE’s 2024 U.S. Hotel Industry Outlook

Alan Woinski and Kim Woinski
March 24th, 2024 at 2:33 PM EDT

Skift Take

CBRE anticipates continued growth in the U.S. hotel industry in 2024, with a 3% RevPAR increase driven by recovery in international travel and strong segments performance, amidst challenges of increasing operational costs and pressure on profit margins.

The DJIA ended Friday down 305 points while Nasdaq was up 27, the S&P 500 fell 7 points and the 10-year treasury yield was down .05 to 4.22%. Lodging stocks were mixed. PK and MAR traded up to new highs while SOND rose 9% on the day.

Citigroup upped their rating on Park Hotels to Buy from Neutral. They upped their price target to $20 from $14.

After RevPAR rose to a record high in 2023, CBRE expects the U.S. to see another year of improvement in 2024. RevPAR growth is forecast to reach about 3% year-over-year, driven by the ongoing recovery in inbound international travel; the strong performance in the meetings and group events segments; and continued demand from leisure travelers. The trend of higher-end hotel outperformance will continue in 2024, with luxury and upper-upscale RevPAR expected to increase by 3.8% and 3.7% year-over-year, respectively. Urban locations will show the strongest growth in RevPAR in 2024, fueled by the continued recovery of inbound international travel; sustained strength in the groups segment; and modest improvement in traditional corporate travel. The recovery in international visitors could also provide a meaningful boost, lifting occupancy by as much as 1.1 percentage points year-over-year, bringing levels within striking distance of all-time highs. Gross operating profit margins declined most of the year except for Q1 2023, which benefited from easy comps when the Omicron variant constrained demand. CGRE expects margins to remain under pressure as cost increases will outpace RevPAR growth amid a renewed focus on brand standards; the tight labor market; and strong wage growth. Below the GOP line, higher insurance and property taxes will pose a greater burden on operational expenditure, while increasing construction costs will impact cash flows. The Caribbean has made a remarkable recovery over the last 24-36 months and appears poised for continued growth. While some risks remain, particularly the impact of climate change and hurricanes, the region’s resilience during the pandemic should provide a foundation for continued strong performance over the course of 2024 and beyond. The Mexican Ministry of Tourism estimates that in 2024, international tourist arrivals to the country could increase by up to 5.4% and foreign expenditures by up to 0.3% compared to 2023. Beach resorts can expect to see above-average hotel occupancy in 2024, supported by new developments. Europe’s hotel and tourism sector is poised to gain further momentum in 2024, with domestic and short-haul leisure travel remaining the primary drivers of the hotel demand. However, following strong growth in RevPAR fueled by inflation and surging demand in 2023, momentum is likely to decelerate to a high single-digit rate, indicating a return to more normalized levels of demand growth. Although airline capacity in Asia Pacific is yet to fully recover to pre-pandemic levels, CBRE forecasts that total international tourism arrivals should reach 2019 levels by the end of this year. While ADRs are expected to normalize in most markets, occupancy growth in well-managed assets should drive revenue growth.

Canada’s hotel industry reported a third consecutive month of occupancy declines but continued growth in ADR, according to CoStar’s February 2024 data. February 2024 (percentage change from 2023): Occupancy: 58.0% (-1.6%) ADR: CAD181.55 (+3.8%) RevPAR: CAD105.37 (+2.2%). Group ADR growth (+7.9%) was the strongest among the segments. Among the provinces and territories, Manitoba recorded the highest February 2024 occupancy level (69.8%), which was 0.5% below 2023. Among the major markets, Vancouver saw the highest occupancy (73.5%), down 1.4% over February 2023. The lowest occupancy among provinces as reported in Prince Edward Island (38.6%), down 38.1% against 2023, due to comparison to the province’s Canada Winter Games host period last year. At the market level, the lowest occupancy was reported in Edmonton (+4.6% to 53.3%).

MetricFebruary 2024Change from 2023
Occupancy58.0%-1.6%
ADRCAD181.55+3.8%
RevPARCAD105.37+2.2%
Group ADR Growth+7.9%N/A
Highest Provincial Occupancy – Manitoba69.8%-0.5%
Highest Market Occupancy – Vancouver73.5%-1.4%
Lowest Provincial Occupancy – Prince Edward Island38.6%-38.1%
Lowest Market Occupancy – Edmonton53.3%+4.6%

Westbrook Partners was served a notice of default with the San Francisco Business Times saying they have not paid anything on its monthly loan on the Four Seasons San Francisco at the Embarcarero since December and is currently behind by $3 million. They bought the hotel in 2019 and has 90 days to bring the account current with its lender or face foreclosure.

DoubleTree Beach Resort by Hilton has completed an extensive renovation project in North Redington Beach, Florida. DoubleTree Beach Resort Tampa Bay-North Redington Beach underwent a floor-to-ceiling upfit that delivered radiant hues, enhanced amenities, and updated public spaces and guest rooms. The seven-story, 125-room hotel is owned and operated by OTO Development. Other public edits include a new fitness center, upgraded meeting space and a resurfaced deck around the outdoor pool. Guestrooms boast remodeled bathrooms and updated furnishings and DoubleTree’s restaurant and tiki hut have been rebranded as Coconut Charlie’s Beach Bar & Grill, a fresh, fun beach concept conceived by OTO Development.

Lloyd Hospitality Group announced the October 2024 opening of the Canopy by Hilton Sioux Falls Downtown, marking the brand’s first property in South Dakota. Located in the historic Steel District, the seven-story, 216-room property will have an onsite restaurant and patio area and nearly 20,000 square feet of meeting and events spaces. In addition to the hotel, the Steel District will also feature a nine-story office building and parking ramp with a retail wrap. Lloyd Cos. Is the developer for the five-building area.

Baywood Hotels filed a building permit with the Memphis and Shelby County Division of Planning and Development to build a 116-room AC Hotel by Marriott in East Memphis, TennesseeBaywood hopes to break ground in 2024 and deliver the project in 2025. The hotel would be part of the Poplar Oaks Planned Development.

In Chautauqua, New YorkThe Spencer Hotel is set to unveil a series of enhancements that will redefine the guest experience. The hotel, owned by Helen Edgington, has embraced its role as a literary sanctuary, becoming the most exotic literary-themed hotel in the U.S. Each guestroom has been meticulously curated to pay homage to iconic authors. The renovations encompass a wide array of upgrades including new wiring, plumbing, heating, and air conditioning to the addition of an elevator for accessibility, no detail has been overlooked. The hotel’s inclusion in the Select Registry highlights its commitment to hospitality excellence.

Thousands are expected to visit the World Equestrian Center this week for the Longines League of Nations event in Ocala, FloridaThe Riding Academy Hotel, which has been under construction for about 2 ½ years, soft opened last Thursday and is now taking reservations. The hotel boasts 390 guestrooms, an outdoor pool, convenience stores and lounges.

The Massanutten Resort is preparing for a major expansion of its water park. It’s also building a hotel and a senior living community. Construction on the major project is slated to begin within the next month in MassanuttenVirginia. The resort is set to expand its indoor water park on two sides. A 22,000 square foot expansion will connect to the park’s existing food and drink area and bring a variety of new attractions. The total expansion will increase the indoor park’s capacity by over 50%. On the opposite side of the water park, a new hotel will be built and connect directly to the park and will have 145 rooms, some flexible meeting space, a small bar and grill and a 6,000 square foot atrium. Great Eastern Resort Corporation also plans to build an active living, 600-unit community for those 55 and older. Construction on the water park expansion and hotel will begin in April. The goal is to have the entire project complete by early 2026. 

Best Western Hotels & Resorts announced the opening of the Best Western Schaumburg – O’Hare NW in SchaumburgIllinois. The hotel is owned by Rajanikant Patel and features 120 guestrooms. The property recently underwent a $2 million renovation. Guestrooms come equipped with new furnishings and hotel amenities include a new modern lobby lounge, fitness center, outdoor pool, business services and 600 square feet of meeting space. 

Personnel Moves

Crestline Hotels & Resorts, LLC appointed Leah McFarland to Senior Vice President of Revenue Strategy. Leah joins Crestline from MCR Hotels where she was Vice President of Revenue Management & e-Commerce. In her position with Crestline, Leah will work closely with executive management and is responsible for leading the team that identifies successful revenue strategies and e-Commerce initiatives for maximization of profit with available demand. 

Europe Highlights

Hampton by Hilton has confirmed the September 2024 opening date of its first hotel in NuneatonEngland. Hampton by Hilton Nuneaton will form part of the Abbey Street mixed-use redevelopment that will include a residential component alongside workspaces, a large cinema complex, a food hall and landscaped public spaces. The hotel will feature 145 rooms, meeting space and a fitness center.

Hilton announced plans to expand its presence in Italy, with the singing of three hotels under its Tapestry Collection by Hilton brand. With properties planned in RomeNaples and Perugia, the hotels will join the existing 36 hotels operating under Hilton brands in the country. Spring House Hotel Rome VaticanTapestry Collection by Hilton will be Hilton’s second Tapestry Collection by Hilton hotel in Rome. The beautifully situated hotel will feature a restaurant and bar, wellness area, outdoor terrace and 73 guestrooms. The property is anticipated to be completed in early 2025 and follows a franchise agreement with Spring House Srl, owned by Stefano Gabbani and his family who have operated the property since 1969. Naples will welcome its first Tapestry Collection by Hilton Hotel through a franchise agreement with Ownco for the Palazzo Caracciolo NaplesTapestry Collection by Hilton hotel. The hotel will continue to welcome guests while renovations take place and is set to fully rebrand this spring. The 145-room hotel will feature a restaurant and bar and well as a gym and wellness area. Located in the heart of Perugia, the opening of La Rosetta Hotel PerugiaTapestry Collection by Hilton will mark Hilton’s first hotel in the area. The 74 guestrooms hotel is set for completion in the second half of 2025 and follows a franchise agreement with a company owned by the family members of Simone Fittuccia and Rodolfo Mencarelli. 

Radisson Hotel Group continues its expansion across the UK and Ireland with the signing of Stanhill Court Hotel, a member of Radisson Individuals. The newly affiliate hotel boasts 56 bedrooms, an Amphitheatre and a range of meeting and event spaces including the beautiful Orangery, with over 140 square meters of versatile space looking out onto the lawn. The hotel also offers onsite parking. 

Accor continues to expand its portfolio of premium, midscale and economy brands across Europe with an array of new hotel additions and a strong line-up of openings slated for the first part of 2024. At a Premium, Midscale & Economydivisional level, the growth plan builds on Accor’s strong foothold in the region, which includes approximately 3,000 PM&E hotels in more than 40 countries. Following a record number of signings last year, as of December 2023, the PM&E division has a development pipeline of more than 350 hotels and 45,000+ rooms in the combined Europe and North Africa region. In the Mediterranean basin, a key growth focus of Accor, the Group is set to expand its presence with new openings in Italy (Rome and Sondrio) and Cyprus (Larnaca) under the Mercureand Handwritten Collection brands, in addition to strong growth in France, with over 30 new openings expected in the first part of 2024. Some other key European growth highlights include the upcoming opening of a flagship Novotelproperty in Hamburg (Germany) and in Bruges (Belgium), the debut if ibis Styles in Iceland (Reykjavik) and in Brussels (Belgium), as well as the opening of the first TRIBE hotel in Latvia (Riga). In the UK, Accor is set to expand the TRIBE brand with a new hotel in Manchester and a new ibis Styles at Gatwick Airport. The Group has robust development plans for its premium hotel portfolio, with the expected opening of Movenpick Resort & Spa Karpacz and Movenpick Wroclaw, both marking the launch of the brand in Poland, and the debut of the Pullman brand in Montenegro and Hungary, in addition to a new Swissotel property in Romania. In the New East, Accor is continuing to expand in sought-after destinations in Georgia, with the upcoming opening of Novotel Tbilisi Center and ibis Styles Batumi, as well as the addition of Movenpick Winter Park Baku in Azerbaijan

Alan Woinski and Kim Woinski
March 24th, 2024 at 2:33 PM EDT

Companies: Accor, AC Hotels by Marriott, Baywood Hotels, Best Western Hotels & Resorts, Canopy by Hilton, DoubleTree by Hilton, Four Seasons, Hampton by Hilton, Hilton Hotels & Resorts, Marriott International, OTO Development, Park Hotels and Resorts Inc., Radisson Hotel Group, Select Registry, Sonder Holdings Inc., Tapestry Collection by Hilton

Locations: Chicago, Edmonton, England, Florida, Ireland, Manitoba, Memphis, Mexico, New York, Rome, San Francisco, South Dakota, Tampa, United States, Vancouver, Virginia

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