Hotel Industry Outlook 2024: Moving Steadily Forward (2024)

Hotel Industry Outlook 2024: Moving Steadily Forward (1)The U.S. lodging industry ended 2023 at 63.0% occupancy, a slight increase over 2022’s 62.7%. Strong growth in the first quarter was offset by modest declines in the latter three quarters, as outbound international travel increased and inbound international travel remained muted, particularly from APAC sources. The group segment continued to post strong year-over-year gains; business travel also improved, albeit at a more modest pace. Overall, ADR increased by 4.3% in 2023, supported by strong growth in the first quarter of the year. ADR growth faltered in the summer months, attributable to lower leisure demand related to a shift toward outbound tourism and widespread concerns about the economic outlook. However, ADR growth rallied in the fall, averaging 3.9% in the last four months of the year. As a result, RevPAR for the year was up 4.9% from the 2022 level, surpassing 2019 levels by 13.6%.

The national averages reflected in the following chart encompass a wide array of markets and trends. While this has always been the case, trends for 2023, similar to those in 2022, continued to reflect more widely divergent results than in prior years. Urban markets recorded the strongest RevPAR growth—over 10%—with notable improvements in both occupancy and ADR, supported by the ongoing recovery of the group and business segments. Suburban and airport markets also benefited from this trend, particularly in terms of ADR. More modest growth was recorded in the interstate, resort, and small metro/town markets; these areas had led the recovery in prior years, largely due to strong leisure demand, and are now experiencing some softening in occupancy and slowing ADR growth.

Recent National Metrics and Latest HVS Forecast

Hotel Industry Outlook 2024: Moving Steadily Forward (2)

Source: STR (Historical), HVS (Forecast)

At 0.5% for the year, supply growth was well below historical norms in 2023. This can be attributed to the limited number of project starts during the height of the pandemic. Supply growth is expected to remain relatively low in the near term, as the pandemic-related trends are exacerbated by the limited availability of financing for new projects in the past 18 months.

With inflation decelerating, fears of a recession receding, and supply growth muted, the overall outlook for the hotel sector is one of modest, steady growth. Demand should continue to grow, supported by accelerating improvement in the group segment, which is the brightest component of the current outlook. Inbound international travel should also increase, offsetting the modest erosion in domestic leisure demand that is expected to continue in 2024. Nevertheless, leisure demand should remain well above pre-pandemic norms. Business travel is also anticipated to improve, although it is increasingly clear that office occupancy levels will not return to pre-pandemic levels. With hybrid work patterns the new normal, business travel is expected to be concentrated on midweek nights, to the detriment of Monday and Thursday nights. Overall, occupancy is forecast to increase modestly over the next several years.

ADR levels are also subject to the divergent trends influencing demand and occupancy, compounded by continued caution related to the economic outlook. These factors are expected to result in modest ADR growth in the near term, reaching the forecasted long-term inflation rate of 3.0% in 2026.

With inflationary concerns diminishing and the prospect of reductions to the rate in 2024, the investment market is showing increased signs of life. Since the meeting in early December, clients have reported a notable increase in lender interest, along with modest improvements in interest rates and debt coverage ratios. Essentially, the ceiling in the current cycle has been established, removing that uncertainty. However, the lower level of uncertainty does not mean significant improvement in clarity, as the timing and pace of future rate reductions are not known. Moreover, although recessionary fears have diminished, the outlook for the economy as a whole remains uncertain, exacerbated by concerns related to ongoing international conflicts and the vagaries of an election year. Thus, lenders and investors are expected to remain cautious as we move through the initial months of this improving cycle.

Hotel Industry Outlook 2024: Moving Steadily Forward (2024)


What is the hospitality industry's outlook for 2024? ›

AI and technology appear set to redefine the hospitality sector in 2024. From AI-driven customer service bots and automated booking systems to smart room technology in hotels, the integration of such technological advancements will enhance efficiency and personalise customer experiences.

What is the outlook for the hotel industry? ›

The Indian hotel industry is expected to register a revenue growth of seven to nine per cent in the next financial year 2024-25. The Indian hotel industry is expected to register a revenue growth of seven to nine per cent in the next financial year 2024-25, according to a report by credit rating firm ICRA.

What do you think is the future of the hotel industry? ›

Overall, the hotel industry is constantly evolving and 2023 promises to bring a lot of interesting trends and changes. From co-working spaces to pop-up hotels and sustainability initiatives, the hotel industry is sure to deliver an engaging experience for its guests in the coming years.

What are the top 5 trends in the hotel industry? ›

In last year's report, we discussed five emerging trends: value-driven decisions, the virtual front desk, hybrid hospitality, new search habits, and the rise of experiential travel.

What is the hospitality crisis in 2024? ›

It continues a slow start to 2024 for the sector, following marginal growth of 0.1% in January in the wake of strong trading over Christmas. Patchy consumer confidence amid still-rising costs and economic and political uncertainty has resulted in cautious consumer spending.

What is the hotel supply in 2024? ›

For 2024, CBRE expects supply growth of just under 1%, with hotel supply projects to have a compound annual growth rate of 0.9% over the next three years.

How the hotel industry is changing? ›

Future Trends in the Hospitality Industry

Hotels will increasingly focus on personalizing the guest experience to cater to individual preferences. This includes leveraging guest data and technology to offer personalized recommendations, room customization options, and tailored services.

How is the hotel industry performing? ›

Global hotel revenue per available room (RevPAR) remains at elevated levels, recording an increase of 14.7% in year-to-date February 2024 compared to the same period in 2019.

How is the hotel industry doing now? ›

The hotel industry is on solid footing with performance levels and growth normalized for much of the world. Hoteliers are experiencing a much more stable operating environment, but finding opportunities for gains requires a sharp focus with demand segments shifting toward historical norms.

What do you think the hospitality industry will be like in the next 10 years? ›

Over the next decade, the hospitality industry will increasingly embrace smart technologies to offer personalised and seamless experiences. Hotels will utilise Internet of Things (IoT) devices to customise room environments based on guest preferences, such as temperature, lighting, and entertainment.

What do you think the hospitality industry will look like 20 years from now? ›

Within 20 years, the Internet of Things (IoT) is expected to be firmly integrated with the lives of hotel guests, making personalization more possible than ever. Expect to find IOT helping guests check out and check in on their own terms.

What does the future of hospitality look like? ›

Products and Services - Efficiency of humans and technology working equally, not a complete takeover, More automated products like self-checkout at coffee shops, More self-serve service in the luxury side of hospitality, Technology/AI will take labor-intensive jobs away, Remote hospitality services, like wellness ...

Which is the fastest growing segment in hotel industry? ›

As a result, domestic leisure travel has become the fastest-growing category for luxury hotel chains. While the overall leisure segment, which includes both domestic and international travel, is growing at a rate of 10-11 percent, the rate of growth for domestic leisure travel is even higher.

Is the hotel industry growing or declining? ›

The U.S. lodging industry ended 2023 at 63.0% occupancy, a slight increase over 2022's 62.7%. Strong growth in the first quarter was offset by modest declines in the latter three quarters, as outbound international travel increased and inbound international travel remained muted, particularly from APAC sources.

What are the four major challenges of the hospitality industry? ›

Five Biggest Challenges Facing The Hospitality Industry in 2024
  • Staff Shortages and Retention. ...
  • Cost of Living Crisis. ...
  • Increased Running and Ingredient Costs. ...
  • Environmental Considerations.

What are the trends in tourism industry in 2024? ›

Another tourism trend in 2024 is the wellness experience or fitness tourism experience. The COVID-19 pandemic has shifted tourist behavior towards a greater emphasis on mental health and spiritual experiences, resulting in the increasing popularity of wellness experience tourism.

Top Articles
Latest Posts
Article information

Author: Tish Haag

Last Updated:

Views: 5915

Rating: 4.7 / 5 (47 voted)

Reviews: 86% of readers found this page helpful

Author information

Name: Tish Haag

Birthday: 1999-11-18

Address: 30256 Tara Expressway, Kutchburgh, VT 92892-0078

Phone: +4215847628708

Job: Internal Consulting Engineer

Hobby: Roller skating, Roller skating, Kayaking, Flying, Graffiti, Ghost hunting, scrapbook

Introduction: My name is Tish Haag, I am a excited, delightful, curious, beautiful, agreeable, enchanting, fancy person who loves writing and wants to share my knowledge and understanding with you.