Hospitality property fundamentals continued to improve last year, and that momentum should carry through 2024. Leisure travel spending in 2023 surpassed the pre-pandemic peak, and while household budgets have been squeezed by elevated inflation, many households continue to prioritize travel and experiences. At the same time, the other traditional hospitality demand pillars of business travel and international visitations continue to make progress toward a full recovery.
After outbound international travel was elevated last year due to the strength of the U.S. dollar, more Americans could opt for domestic destinations in 2024 as geopolitical conflicts in Eastern Europe and the Middle East sway behavior. In addition, domestic airfare and fuel costs have been declining, supporting travel by both plane and car. Business travel, however, may still take some time to fully recover, especially large events with international attendance. Smaller group travel on a regional scale is accelerating and driving room demand, however, with firms citing a desire to use these activities for in-person interactions during a time when employees are meeting face-to-face less frequently.
Investor and lender confidence has returned to the sector amid improving property fundamentals, but higher debt costs and tighter capital availability remain transactional hurdles. The prospect of modest rate cuts this year could bolster investment activity and revive investor confidence. Stabilized assets and outperforming budget-friendly accommodations have been the predominant preference for financiers, but investors may begin to pursue a wider range of opportunities as sentiment strengthens.
As you navigate the complex environment, our investment brokerage and financing specialists across the U.S. and Canada are at your disposal, providing street-level guidance to empower your decisions.
In this report:
- National Economy
- National Hotel Overview
- Capital Markets
- Hotel Investment Overlook
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