Hotel Brand Performance 2024

Slowing RevPAR Growth Makes Hotel Brand Selection More Critical

- Slowing RevPAR growth and maturation of the U.S. hotel industry are driving brand proliferation to attract new customers. The average number of brands per brand family tracked by CBRE increased to 25 in 2023 from 13 in 2013.

- RevPAR growth fell to 1.5% between 2018 and 2023 from 3% between 2013 and 2018. Given that year-to-date 2024 RevPAR growth is lower than it was a year ago, we believe this slowdown is more reflective of increasing competition from alternative lodging sources rather than a lagging pandemic recovery.

- To maximize profits, owners and developers must pick an attractive chain scale and an outperforming brand. Selecting a brand that outperforms the average has become increasingly difficult. Only 30% of brands delivered above-average RevPAR growth over the past five years, down from the 52% of brands with above-average RevPAR from 2013 to 2018.

- A chain scale doesn’t determine RevPAR performance; there is a wide range of performance among brands. Over the past five years, the top-performing brands outperformed their lagging chain scale counterparts by as much as 79%. Assuming a flow-through multiple of 1.5x to 2.0x from revenues to GOP, this implies up to 160%incremental profit performance.

- Between 2013 and 2023, only 26% of the same-store brands in this analysis generated RevPAR growth above inflation. Between 2018 and 2023, largely due to high inflation levels beginning in 2021, only 3% of these brands boasted RevPAR above inflation. Even if inflation had remained below 2% over the past five years, 70% of these brands would still have lagged inflation with an average RevPAR growth of just 1.3%.

- Upper-midscale chains were the best performers over both five-year periods examined. Free breakfast, strong brand recognition, no resort fees and the ability to attract guests who trade both up and down have increased the appeal of select-service hotels.

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