For 2024, projected gains in average daily rate (ADR) and revenue per available room (RevPAR) were each downgraded, -0.5 percentage points to +1.5% and -0.6 ppts to +1.4%, respectively. Occupancy for the year was lowered 0.1 ppts to 62.9%, after the previous forecast projected the metric to remain steady from 2023. For 2025, the occupancy growth projection was downgraded 0.4 ppts, and the forecast for ADR and RevPAR increases were lowered to +1.6% and +1.8%, respectively.
“The outlook for 2025 remains somewhat in flux, with positive sentiment potentially offset by the higher cost of living,” said Amanda Hite, STR president. “Based on current economic conditions, higher-end hotels will continue to drive industry performance. The change in the presidential administration is anticipated to yield stronger economic conditions at first, which is not yet reflected in the data.”
“Looking ahead to next year, the economic drivers are supportive of growth in travel activity. Consumer spending and business investment are expected to expand, helping support additional gains in business and group travel demand. Growth in international visitation also represents a tailwind for 2025,” said Aran Ryan, director of industry studies at Tourism Economics. “The forecast was prepared pre-election and assumed economic conditions consistent with political status quo. There is the potential that the Trump administration will pursue looser fiscal policy and provide a temporary boost to the economy, before offsetting effects such as tariffs and immigration act to moderately slow growth.”
“Annual GOP and EBITDA margins remain unchanged from the previous forecast, both expected to improve slightly year over year,” said Hite. “For 2025, higher growth is projected across both metrics due to lower labor costs, with inflation-adjusted GOP forecasted to inch closer to 2019 levels.”
Tags: Amanda Hite, STR, Aran Ryan, Tourism Economics
