Market watch article
Market Watch Territory: 
South Central Texas
Market Watch Month: 
November 2024

In Q3 2024, hotel industry records hit new highs with ~$56B in room revenue and ~521M available room nights, despite flat demand and a 0.5% drop in occupancy. ADR growth slowed to 1.4%, marking the fourth consecutive decline, with RevPAR up just 0.9%—the second-lowest rate since 2021. While top-tier hotels saw demand rise (luxury up 3.1%) and urban markets outperformed with RevPAR up 2%, economy hotels faced a 2.4% drop in demand and rising operating costs, from labor to insurance. This cost pressure, paired with softening ADR gains, signals a shift back to pre-pandemic norms, with higher-end hotels benefiting from strong corporate and group travel.

The Federal Reserve’s September rate cuts offer some relief, though JPMorgan CEO Jamie Dimon cautions that certain economic fundamentals remain decoupled from Fed actions and election outcomes. This suggests hotel performance will continue to "bifurcate," with upscale properties capturing demand and economy/midscale hotels navigating cost pressures. The outlook points to a steady, modest recovery, with urban and high-demand markets leading growth and economy brands adjusting to new competition and operational challenges.

Market Expert

Associate
National Hospitality Division
Alexander Curry
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