Key Takeaways:

  • Economy

    • CBRE’s 2024 GDP growth forecast was increased from 2.3% to 2.6%.
      GDP growth has exceeded expectations so far this year, and the GDP NowCast suggests a 3Q beat, which could lead to additional upside. With rate cuts underway, interest rates are expected to drop to 3.0% by the end of 2025.
    • Consumer risks remain as wage growth slows and employment pulls back.
      Employment declined slightly for the first time in August and wage growth continues to moderate, both of which are risks to travel. Mitigating factors include wage growth outpacing inflation, record stock market levels, and continued declines in airfares.
    • CMBS borrowing rates remain elevated vs. 2019 but are down from recent highs.
      Hotel borrowing rates fell to 8.0%, down 30 basis points compared to a year ago, but still up 170 bps compared to August 2019. CMBS loan issuance more than doubled from $0.7 bil. in Aug. 2023 to $1.8 bil. in Aug 2024. With the average loan count increasing slightly, the average loan size more than doubled year-over-year from $52.6 mil. to $112.9 mil. in August 2024.

  • Current Trends

    • Extra weekends and the shift in Labor Day positively impacted August RevPAR.
      August RevPAR increased by 1.4%, as a 0.1% decrease in occupancy was more than offset by a 1.5% increase in ADR. The performance gap between Resort and Urban locations continued narrowing as leisure travel normalized. Upper-priced chains outperformed while the pace of declines in lower price points approaches zero.
    • The majority of markets experienced RevPAR expansion in August.
      63% the 65 Hotel Horizons® markets posted RevPAR growth in August, with only 37% of markets experiencing a decline. This is roughly consistent with the YTD trend of 50% - 60%.
    • Total hotel revenues grew 2.1% in July, above the YTD trend of 1.7%.
      Despite 2.1% total revenue growth in July, an 80-basis point contraction in GOP margins led to a 3.2% decrease in profit dollars, below the -1.2% YTD trend. While wage growth is moderating, it is still above revenue growth and rising expenses overall continue to impact hotel profitability.

  • Food for Thought

    • Short-term rentals showed strong demand growth in August.
      In August, short-term rentals continued taking share from hotels, with demand growing 9.8% compared with a 0.3% increase in hotel demand. Short-term rental occupancy increased 4.4% and ADR growth of 5.4% yielded a 10.1% increase in RevPAR. The extra weekend and Labor Day shift contributed to these results.
    • The inbound/outbound international travel gap remains a headwind.
      Outbound international travel grew to 120% of 2019’s level in August, while inbound lagged at 89%. Year-over-year growth in outbound travel rose in August to 11.7%, outpacing the growth of inbound travel for the first time in 2024. Travel from Japan and China reached a post-pandemic high of 57% of 2019.
    • TSA throughput appears to be normalizing, up 2.2% in September.
      TSA throughput reached 108% of 2019 levels during September, up slightly from August’s performance of 104%. Strong throughput was reflected in Airport hotel RevPAR, which grew 3.2% in August. This marked the fifth consecutive month of RevPAR growth for Airport locations.

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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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