Hotel Revenue Per Available Room Expected to Top Pre-Pandemic Totals in 2022
New data suggests hotel revenue per available room (RevPAR) for properties in the United States is now expected to surpass 2019 levels in 2022.
According to the latest forecast from STR and Tourism Economics presented at the 44th Annual NYU International Hospitality Industry Investment Conference, the most significant factor in the updated projections was a +$11 adjustment in 2022 average daily rate (ADR).
Occupancy for 2022 is projected to come in under the pre-pandemic totals, but ADR and RevPAR are forecasted at $14 and $6 higher than in 2019, respectively. Previous versions of the forecast projected nominal RevPAR recovery in 2023.
“Demand and occupancy have trended well in line with our recent forecasts, but pricing continues to exceed expectations due to the influence of inflation as well as the economic fundamentals supporting increased guest spending,” STR president Amanda Hite said.
“This latest forecast acknowledges the risk of a light recession with no anticipation of mass layoffs and household finances in a strong position to mitigate recession impacts,” Hite continued. “The traveling public is less affected by recession, and right now, we are forecasting demand to reach historic levels in 2023 as business travel recovery has ramped up and joined the incredible demand from the leisure sector.”
When adjusted for inflation, full recovery of ADR and RevPAR are not projected until 2024, while central business districts and the Top 25 Markets are not expected to reach full RevPAR recovery until after 2024.
“The outlook for hotel performance remains positive,” Tourism Economics director of lodging analytics Aran Ryan said. “Even as the economy faces headwinds of higher interest rates, volatile financial markets, and inflation, lodging demand and room rates are being buoyed by strong household finances and the return of business travel.”
In May, PwC released its latest forecast for the U.S. hospitality industry, which projects that average daily room rates (ADR) will increase 16.9 percent for the year, propelling 2022 RevPAR (revenue per available room) to a 28.1 percent jump or approximately 106 percent of pre-pandemic levels, on a nominal dollar basis.