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CBRE Group, Inc. (NYSE: CBRE) has revised its forecast for the U.S. lodging industry as the COVID-19 Delta variant impacts the level of group and business travel for the fall and winter.
What Happened: In the wake of the Delta variant’s emergence and spread, CBRE Hotels Research is now forecasting U.S. hotels will achieve a 2021 annual occupancy level of 54% and an average daily rate (ADR) of $112.85. The resulting revenue per available room (RevPAR) of $60.91 will be 41.7% greater than the annual RevPAR value of $42.97 recorded in 2020.
However, the RevPAR level will be 29.3% lower than the $86.16 RevPAR posted in 2019. CBRE is predicting corporate travel budgets will continue to be constrained into 2022, with a forecasted occupancy gain of 8% plus a 7.1% boost to ADR, with a net result of a 15.6% forecast increase in RevPAR for the year.
“The Delta variant and increasing number of COVID infections led to delays in ‘return to office’ plans at many firms and coincided with the start of the 2022 travel-budgeting season,” said Rachael Rothman, CBRE’s head of hotel research and data analytics. “Unfortunately, for business centric hotels, the rebound in business travel expected in September of 2021 is now delayed and will likely have a ripple effect into 2022’s corporate travel budgets.”
What Happens Next: CBRE is predicting convention travel will emerge at a greater speed in markets with warm weather and low operating costs, citing Dallas, Las Vegas, New Orleans, Orlando and San Antonio as prime candidates for an earlier recovery.
For 2022, CBRE is expecting leisure demand to drive the lodging industry in resort and remote locations, along with so-called “bleisure” travel in markets where business and leisure pursuits overlap.
Also, CBRE is forecasting the U.S. national occupancy level will have an average of 62% in 2023, with nominal ADR levels reaching the pre-pandemic peak by the second quarter of 2023 and a full recovery in nominal RevPAR by 2024.
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