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CBRE forecasts that revenue per available room (RevPAR) will grow modestly in 2025, driven by the continued outperformance of urban locations benefiting from increased group and business travel, as well as a projected rise in demand for drive-to and regional leisure destinations.
CBRE forecasts a 1.3% increase in RevPAR for 2025, with occupancy and average daily rate (ADR) rising by 14 basis-points (bps) and 1.2% year-over-year, respectively. This represents slightly softer growth than had been anticipated in CBRE’s February forecast, which projected 2.0% RevPAR growth, based on a 21-bp boost in occupancy rates and a 1.6% increase in ADR.
CBRE’s forecast is predicated on an expected 1.4% increase in GDP growth this year (down from 2.4% annual growth as of the February forecast) and a 2.9% average inflation rate for 2025 (40 bps higher than anticipated in February). While the economy is expected to grow more slowly, growth will be strong enough to support the lodging industry’s performance.
“Economic and geopolitical uncertainties aside, several factors will drive RevPAR growth in 2025. These include an uptick in group and business travel, along with a weaker U.S. dollar and lower airfares, which may encourage domestic travelers to stay closer to home while boosting inbound international visitation to the U.S.,” said Rachael Rothman, CBRE’s Head of Hotel Research & Data Analytics. “These trends are expected to particularly benefit urban hotels, regional resorts and drive-to destinations.”
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