HM on Location: Hotel Data Conference 2024

'Bifurcation' was the word at the 2024 Hotel Data Conference last week in Nashville. Upscale chain scales are performing better than midscale and economy. Group and business travel are improving while leisure travel may be slowing. 

Though the year hasn't been as strong as hoteliers may have hoped and wanted, there are things to look forward to, said Emmy Hise, senior director of hospitality analytics at the CoStar Group. "The continued return of group and business travelers and inbound international travel," she said during the kick-off session. "We are seeing inflation cooling, which will hopefully help our expenses and our profitability.

Hotel Data Conference 2024 Emmy Hise
CoStar's Emmy Hise (Hotel Management)

"But there are things the industry needs to kick the tires on and be aware of," she said. "The industry needs to prepare that there will likely continue to be a broken outbound travel. Profitability is lower than normal and while TSA passenger data are showing record levels, hotel performance isn't there yet."

During the conference, STR and Tourism Economics made slight adjustments to the revised 2024-25 U.S. hotel forecast, but kept RevPAR projections the same for the rest of 2024 and 2025.

STR President Amanda Hite said the forecast was slightly tweaked. “We had a strong Q2, and demand came in much stronger than we had forecasted, which certainly helped in this 2024 forecast,” Hite said.

Hotel Data Conference 2024 U.S. Forecast

Overall, she said the positive projections were driven more by rate growth than occupancy. But because of weaker ADR in the second quarter, there is a risk for this forecast to not be realized. “There’s certainly some downside risk to ADR, and that’s what we’re leaning on for most of our growth for the rest of the year,” Hite said. “As we move into 2025, you’ll see a little more occupancy gain in the first half of the year, but rate growth is really going to be the driver for us.”

RevPAR growth is solid but it’s driven more by rate growth than occupancy, Hite said. She added that most of the growth is coming in the upscale and upper upscale segments. She also said while the luxury segment doesn’t have as much growth , the forecast previously had luxury slightly negative for the rest of the year, which was adjusted to slightly positive because of the demand growth.

“For the last five months, the luxury segment has seen demand growth at 8 percent or higher,” she said. “So, while the RevPAR gains aren’t as strong, the demand growth is there.”

A lack of leisure business growth is holding back the luxury segment from growing any more, Hite said, while upper upscale continues to be lifted by group demand. “That’s really been what we’re banking on in terms of demand growth for the year. It’s being driven by the group business,” she said.

Hotel Data Conference

 

As far as wild cards, Hite said it’s hard to think of one that could have positive results, but she can think of several that could have negative consequences. She said preliminary July numbers show demand and rate not being as strong as forecasted.

As the industry looks ahead to 2025, Hite says they expect to see more occupancy gain in the first half of the year, but rate growth is really going to be the driver.

Most of the RevPAR growth next year will be in the upper-upscale segment, lifted by strong group demand, Hite said. The luxury segment doesn’t have the most growth, but the forecast revised upward its RevPAR growth into slightly positive territory due to increased demand for the segment. For the rest of the year, the midscale and economy hotel segments will see negative RevPAR movement, she said. It will improve heading into 2025, however.

The top 25 U.S. markets continue to lead the way in terms of RevPAR gains, Hite said. The top 25 markets make up 36 percent of the supply in the total U.S., but they make up 45 percent of revenue for the industry.

But there is bifurcation within the top 25 markets as well, agreed Daniel Del Olmo, president of Sage Hospitality Group, and Jennifer Barnwell, president of Curator Hotel & Resort Collection, who were also part of the panel.

San Francisco and Portland, Ore. are still really tough markets while New York City is absolutely booming.