The hospitality industry has been, and continues to be, affected by a variety of external factors that influence both the lodging and the investment markets. The COVID-19 pandemic began in early 2020 and had a significant impact throughout the world and on the respective economies. The onset of the pandemic resulted in decreased business activity, causing widespread economic hardships, including increases in unemployment. The hospitality industry was severely affected, as travel declined sharply and as restrictions on group sizes resulted in the cancellations of meetings, conventions, and events. The depth and duration of this impact was influenced by the course of the pandemic and the nature and extent of restrictions on business and travel activity; the period of greatest impact was 2020. With the availability of vaccines and lifting of restrictions, conditions generally improved in 2021, although the Omicron variant slowed the recovery in the latter part of the year. The peak impact of the pandemic on the travel industry is well behind us. While group meetings and events have resumed, business travel remains below pre-pandemic levels given that office occupancy and work-related travel have been affected by more widespread remote work options. Travel patterns have shifted to include more leisure demand, anticipated to comprise a greater proportion of lodging demand in the future. While ADR and RevPAR have surpassed 2019 levels in most markets, our research reflects a general expectation that lagging occupancy levels will continue to improve over the next two years; the timing and pace of recovery for individual markets will vary based on market-specific characteristics and conditions.

Exacerbated by rising oil and gas prices in the wake of the Russia-Ukraine conflict, the inflationary trends that first emerged during the pandemic continued through 2022. Driven by supply-chain disruptions and pent-up consumer demand during the pandemic, prices for most goods and services increased substantially. The Federal Reserve is combating inflation through successive interest rate hikes (seven in 2022, and another three in the first half of 2023) with initial success, as the pace of inflation has decelerated. While job growth remains strong, the risk of a recession remains a concern, affecting the stock market, debt availability, and consumer confidence. As a result, the near-term outlook is unclear, and investors remain cautious. This perspective, when combined with the increases in interest rates, has put downward pressure on real estate values. As of mid-year 2023, inflation levels are anticipated to remain somewhat elevated in the near term. Over the longer term, inflation is expected to moderate back to more normalized levels as the economy moves through the current cycle.

* Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent “big picture” data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

ADR, Demand, Occupancy, RevPAR, and Supply Projections:

Change In Value For Market:

United States RevPAR Change

United States RevPAR

For more information, please contact:

	Rod Clough, MAI President - Americas (He/Him) [email protected] +1 214 629-1136 (w)
	Anne Lloyd-Jones, MAI, CRE Director of Consulting & Valuation Services National Practice Leader [email protected] +1 516 248-8828 (w)
	McKenna Luke, MAI Managing Director Valuation, Market & Feasibility Consulting [email protected] +1 303 704-2636 (w)