US Hotel Revenues Fully Recover in 2022
February 14, 2023 | S&P Capital IQ
The U.S. hotel sector has largely recovered from the pandemic’s fallout, as revenues, profits and labor costs hit record highs in 2022, according to STR’s P&L data for the year.
Total estimated revenue and gross operating profit in 2022 were $239.7 billion and $101.3 billion, respectively. The metrics, both all-time highs, indicate the sector has fully recovered when compared to 2019 levels. The outperformance was attributed to strong demand and pricing power influenced by inflation, among other things.
On a per-available-room basis, gross operating profit was down 5.5% from 2019 to $73.70 and total revenue was 4.3% lower at $202.23.
Among the top 25 markets included in the report, seven fully surpassed 2019 total revenue per available room and gross operating profit per available room levels. These markets are Tampa, Miami and Orlando in Florida; San Diego and Orange County in California; Nashville, Tenn.; and Phoenix.
CBRE’s November 2022 Hotel Horizons report predicts RevPAR will grow 5.8% in 2023 despite persistent inflation and a possible moderate recession. CBRE earlier forecast RevPAR growth of 5.6% for the year.
Supply growth over the next five years is expected to be 40% lower than historical trends due to the high cost of construction materials, a tight labor market and high interest rates. This could result in near-term cash flows being dedicated to debt reductions and renovations, according to CBRE.
Hotels across all service levels are predicted to surpass 2019 RevPAR levels by the close of 2023.
