A forecast for the US hotel industry finds that while top-line performance is advancing, growing operating expenses are projected to limit profit growth over the remainder of 2023.

The projections were presented at the 45th annual NYU international hospitality industry investment conference by hospitality data and insights platforms STR and Tourism Economics.

The occupancy forecast was lowered 0.2% from a previous projection published in January 2023, but forecasts for average daily rate (ADR) and revenue per available room (RevPAR) were increased 1.5% and 1.3% respectively.

For 2024, a 1.4% downgrade in occupancy coupled with a 0.7% lift in ADR meant a RevPAR downgrade of 0.6%.

RevPAR, the key top-line performance metric, fully recovered in 2022 on a nominal basis despite a looming recession. However, when adjusted for inflation, it will not recover fully until 2025.

Gross operating profit per available room (GOPPAR) also recovered in 2022 with limited growth for US hotels forecasted for 2023 and more sizeable gains projected in 2024. The GOPPAR projection for 2023 was lowered 2.7% from January’s forecast and downgraded 4% for 2024.

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STR president Amanda Hite commented: “Even if the anticipated recession is more on the shallow side, performance growth in 2023 will be remarkable. Overall, much of the industry is in a solid position to navigate choppy waters ahead. We will even see a return to the year-over-year benchmark as the pandemic calendar comparables are behind us.”

Tourism Economics director of industry studies Aran Ryan added: “We expect lodging demand growth will slow but remain positive on a year-over-year basis as group events and international travellers return, and households continue to prioritise leisure travel.”

In April 2023, STR reported that hotel construction activity is down globally with a year-on-year decline.