Key Takeaways

  • Economy

    • CBRE now expects 1.2% GDP growth in 2024, eliminating recession call.
      The stronger GDP growth outlook is predicated on four Fed interest rate cuts, moderating inflation, and 0.7% employment gains.
    • Excess savings declined, and checkable deposits decreased.
      Excess savings have declined over 60% since January 2023, and checkable deposits declined 13% in Q3 2023 Y-o-Y. Despite these declines consumer leverage remains in check on both a real and nominal basis, and wages are outpacing inflation.
    • Credit spreads have pulled back from post-pandemic highs.
      Spreads and interest rates have both declined year-over-year, pulling back to 151 bps and 90 bps, respectively; however, they are still well above pre-pandemic averages.

  • Current Trends

    • Short-term rentals continue to take share from hotels.
      Hotel demand growth declined 2.1% in November, while short-term rental demand rose 8.0%. However, pandemic-fueled occupancy gains for STRs have been erased, causing RevPAR to decline by 4.3%.
    • The gap between inbound and outbound international travel persists.
      The gap between inbound and outbound international travel widened to 33.3 percentage points in November, with some West Coast markets experiencing a noticeable pullback during the month.
    • TSA throughput is up 7.9% December month-to-date.
      MTD, TSA throughput is running 101%of 2019, and it’s up 7.9% year over year. Demand for alternative lodging sources like cruises and short-term rentals continued to outpace hotel demand.

  • Food for Thought

    • November RevPAR declined 1.7% on a 2.8% decline in occupancy.
      RevPAR contraction in the lower price tiers contributed to overall RevPAR declines. Urban hotels were the only location type to post positive RevPAR growth during the month.
    • RevPAR in more markets experienced contraction versus growth in November.
      52% of 65 Hotel Horizons markets experienced declining RevPAR in November, up from 49% in October and 42% in September.
    • GOP margins contracted in October as wages continued to increase.
      Despite a 2.6% increase in total revenues, GOP margins contracted 1.3 percentage points, resulting in a 0.6% decline in GOP dollars. We expect margins to continue to be under pressure in 2024.

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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 2021 revenue). The company has more than 105,000 employees (excluding 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.

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