Hospitality Investing News - Pacific Northwest May 2024

The U.S. hotel industry is experiencing a shift in demand patterns, signaling the end of the "revenge travel" surge seen post-pandemic. In March 2024, U.S. hotel revenue per available room (RevPAR) declined 2.2%, marking the first year-over-year loss of the post-pandemic era. This decline comes after a full year of stagnant or declining demand, resulting in a decrease in occupancy and only a slight increase in average daily rate (ADR).

Weekend occupancy declines began the trend, which was expected due to the previous surge in leisure travel. However, the decline has spread to weekday occupancy, affecting different hotel classes. Lower-tier hotels and smaller markets have struggled with falling occupancy and lower ADR growth, while top 25 markets continue to attract corporate and group travel, resulting in more resilient demand.

The industry faces challenges such as slowing rate growth, varying demand across different classes, and a rise in price-consciousness among consumers. Credit card debt has increased, and delinquency rates are at their highest level since 2011. Despite these challenges, markets with strong corporate demand bases are expected to perform well in the coming months.