U.S. Hotels State of the Union August 2023 Edition
A Pictorial Update on Our Latest Thoughts and the Facts and Figures Influencing Our Industry
Key Takeaways:
Capital Markets
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Margins remain under pressure across all segments.
Margins declined 2.7 percentage points in May. Subsequently, gross operating profit dollars for all hotels decreased by 2.5% year-over-year in May. -
U.S. loan origination was down again in July versus 2022.
The pace of loan origination continued to slow in July to 5 from 19 a year ago as interest rates continued to rise. Hotel CMBS interest rates reached 9.4% in June, up from 8.5% a year ago. -
Full-service price per key declined while limited service increased.
Year over year, full-service price per key dropped 18.4% in Q2 to $144,963 per key. Limited-service asset price per key rose 2.1% to $94,511.
Current Trends
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June RevPAR declined 0.1%. on a 1.8% decline in occupancy.
Chain-affiliated hotels outperformed increasing 1.6% year-over-year in June compared with a 4.8% decline for independent hotels. -
Outbound U.S. travelers outpaced inbound international visitors.
Americans traveling to Europe and the Caribbean exceeded 2019 in June by 4.6% and 8.5%, respectively. Inbound international travel continued to lag at 73% of 2019. -
Brand.com demand has increased materially versus OTAs.
Relative to 2019, Brand.com demand has increased 11.5% outpacing other booking channels including OTAs which were 1.8% below 2019 levels.
Food for Thought
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Wage growth is outpacing inflation for the first time in two years.
Wages grew 4.4% in June, outpacing the 3.1% growth in the consumer price index which could lead to increased bookings going forward. -
Excess savings are being spent but consumers still have money for now.
Consumers have been spending excess savings accumulated during the pandemic, with $770 billion remaining. The personal savings rate was 4.3% in June, below the historical average of nearly 6.5%. -
Short-term rentals appear to be taking share from hotels.
Hotel demand growth declined 1.5% in June while short-term rental demand rose 14.3%, suggesting that short-term rentals may be taking share from hotels.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world's largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
