According to forecasts from CoStar and Tourism Economics, high-end hotels are set to lead the lodging industry’s performance. The firms have slightly adjusted their growth projections but maintain the previous estimates for average daily rates and revenue per available room, predicting increases of 1.6% and 1.8%, respectively. Occupancy rates are expected to rise modestly to 63.1%.
Amanda Hite, President of STR, noted that while there is growing business optimism, the broader economic landscape has not shifted significantly recently. The positive performance in Q4 2022 was largely attributed to seasonal factors like holiday travel and weather events. She emphasized that there are no immediate expectations of trend changes as the effects of new governmental policies remain unclear, though high-end hotels are anticipated to shine in 2025.
Aran Ryan, Director of Industry Studies at Tourism Economics, projected a favorable economic environment for travel in 2025, with low unemployment and stabilizing inflation contributing to consumer spending. However, he cautioned about potential risks stemming from trade and immigration policies that could hinder inbound travel.
Looking ahead, Hite expressed optimism that hotel labor costs would stabilize in 2025 as the industry adjusts to current labor market trends, positively impacting gross operating profit margins. With business travel and group gatherings on the rise, she indicated that food and beverage departments could witness significant growth, while costs in utilities are expected to climb.
CoStar and Tourism Economics predict that higher-end hotels will outperform the industry, with average daily rate and revenue growth remaining steady. STR’s Amanda Hite emphasizes the temporary nature of recent performance boosts and the uncertainty of policy impacts, while Tourism Economics’ Aran Ryan sees favorable economic conditions for travel in 2025, despite looming risks. Labor costs are expected to stabilize, enhancing gross operating profit margins.
In summary, high-end hotels will spearhead industry growth as projected by CoStar and Tourism Economics, despite minor forecast adjustments. Factors such as low unemployment and increased consumer spending create a positive landscape for travel. However, potential risks from policy changes could pose challenges, even as operational efficiencies may improve profitability in hotel sectors.
Original Source: newslink.mba.org
