Hotel Occupancy Expected to Soften

According to CBRE Hotels Research’s latest report, the U.S. lodging supply will increase at an annual pace greater than the long-run average through 2022.

Meanwhile, the annual rise in the demand for these new hotel rooms is projected to average roughly three-quarters of its respective long-run average.  The result is declining occupancy forecasts for the U.S. lodging industry in both 2020 and 2021.

According to the June 2019 edition of Hotel Horizons, CBRE Hotels Research projects U.S. national occupancy levels to remain flat in 2019 at 66.2 percent, then decline to 65.7 percent in 2020 and 64.6 percent in 2021.  For context, U.S. occupancy averaged 62.5 percent from 1988 through 2018, according to STR.

“Given the cyclical nature of the lodging industry, it is expected that hotel owners will realize a bit of a slowdown after 10 consecutive years of occupancy expansion,” said R. Mark Woodworth, Senior Managing Director of CBRE Hotels Research.  “Despite the anticipated declines, the national occupancy level will remain at least 200 basis points above the long-run average through 2023.  This provides a cushion should economic and market conditions take a severe turn for the worse.”