CBRE expects modest growth in the hotel revenue per available rooms (RevPAR) by 2025. This is largely due to urban markets and leisure destinations.
Revenue Forecasts for 2025
CBRE RevPAR is expected to rise by 1.3% in 2025. This is a slight decrease from their February forecast, which was 2.0%. This estimate is based upon a 14 basis-point (bps) rise in occupancy, and a 1.2% increase in average daily rate.
In addition, the firm’s forecast includes a 1.4% predicted GDP growth this year. This is down from the 2.4% forecast in February. Inflation is expected to average 2.9% in 2025. This represents a 40-bps increase over the prediction made in February. CBRE continues to be optimistic about the lodging sector’s performance despite lower economic growth forecasts.
Factors Influencing RevPAR Growth
In 2025, several factors will drive RevPAR. The increase in group and business tourism, the weaker U.S. Dollar and lower airfares are likely to encourage domestic travel. Inbound international visitors will also be encouraged by these factors. This is especially beneficial for urban hotels, regional resorts, and drive-to locations.
Rachael Rochman, CBRE’s Head of Hotel Research and Data Analytics predicts RevPAR growth between 1,0% and 3,0% in the next few year. The 2026 FIFA World Cup and 2028 Summer Olympics are major events that will stimulate demand. A new theme park in Orlando and other attractions such as the FIFA World Cup 2026 and Summer Olympics 2028, along with the introduction of new attractions, like the Orlando theme park, should also maintain the growth momentum.
Market Forecasts and Growth in Supply
The economic growth and the hotel demand is expected to slow down soon. However, it’s also predicted that supply growth will also decelerate because of increased construction costs and higher financing rates, as well as a tightening labor market. Michael Nhu (CBRE’s Global Hotels Forecasting Head and Senior Economist) expects the supply to grow at an average of 0.8% annually in the next four year, half of what the industry has seen historically.
CBRE has added 11 leisure-oriented markets to its forecast. They include Boulder and Colorado’s ski markets, California Wine Country, Florida Panhandle and Utah National Parks. These additions reflect recent shifts and trends in travel, providing insights into new opportunities.
