• The question is when, not if, RevPAR will recover   


A Pictorial Update on Our Latest Thoughts and the Facts and Figures Influencing Our Industry

CBRE Hotels;

The CBRE Hotels Research State of the Union showcases a pictorial review of current hotel trends, leading and coincident indicators of hotel demand, and an update on cost pressures and margin flow-through. The report showcases current demand trends, as well as fundamentals by segment, location type and chain scale. The report also provides a brief update on short-term rental, group business, and capital market trends, the transaction market, the impact of virtual work and the outlook for office vacancy.

Key Takeaways

• The worst of 2022 is likely behind us. January was a low point, but things have started to improve in February.

• Recent travel trend data and leading indicators indicate that trends should continue to improve over the near term.

• The reopening of the US border in November has led to strong gains in inbound international travel, with many gateways reaching or exceeding their 2019 levels in December; however, there is still material runway for growth in 2022 and expect markets like New York, San Francisco, Miami, and Los Angeles to continue to benefit.

• Both OTA and brand.com have essentially recovered to pre-pandemic levels. Group and corporate travel remain the laggards.

• Operating efficiencies observed during the summer of 2021 waned during the back of the year. December 2021 GOP levels exceeded 2019, but full-year 2021 GOP came in 35.5% below 2019.

• Stronger GOP levels resulted in a nearly 50% reduction in CMBS delinquency from December 2020 to December 2021.

• Short-term rental market share has normalized as hotels have reopened. Large units in southern and drive-to destinations are driving revenue growth.

• 2022 GDP estimates have been negatively revised and rate increases could be a headwind, but an optimistic labor outlook and the ‘return to office’ should support further RevPAR gains.

• Hotel construction expenditures continue to pull back and input cost increases will remain headwinds to incremental supply growth, boosting investor appetite for existing assets.

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