CBRE Forecasts Enhanced RevPAR Growth in 2023 Despite Economic Headwinds

Composed by: Rachael Rothman and Matt Mowell

Even with projections of persistent inflation and a reasonable economic recession, CBRE’s November 2022 Hotel Horizons® forecast calls for a 5.8 p.c improve in rooms income for every available home (RevPAR) in 2023. This is up from CBRE’s earlier forecast of a 5.6 per cent boost in RevPAR for 2023.

Propelling CBRE’s amplified outlook for RevPAR is an predicted 4.2 % rise in regular day by day rate (ADR), driven in component by the continuation of higher than lengthy-run common inflation. For 2023, CBRE is forecasting the Customer Value Index in the U.S. to enhance by 3.5 per cent Y-o-Y. Inflation continues to have a combined effects on the hotel field, bolstering major-line advancement while pressuring margins.

Supply and Need

Inflation is also impacting growth exercise. The blend of climbing development product fees, a restricted labor market place, and high interest prices will serve to retain offer advancement about the upcoming five a long time 40 % reduce than historic trends. Alternatively of construction, we assume cash flows in the in the vicinity of term to be concentrated on credit card debt reductions, renovations and remodels provided the backlog of Capex that designed up in the course of the pandemic.

Offered its forecast for a .2 p.c decrease in 2023 gross domestic merchandise (GDP), CBRE lowered its anticipations for demand growth from 3.3 per cent in their August 2022 forecasts to 2.9 percent in the November update. With the projected provide improve remaining at 1.2 % for 2023, the net result is a reduction in CBRE’s occupancy development estimate for the 12 months to 1.6 p.c, down from the 2. p.c improve formerly forecast. The decreasing of occupancy expectations will considerably offset the increased outlook for ADR growth.

It is well worth noting that the 5.8 per cent RevPAR development forecast for 2023 is front-conclude loaded, significantly in the initial quarter of the calendar year specified the quick comparisons designed by the outbreak of the Omicron variant in early 2022. Our RevPAR forecast for the very first quarter of 2023 calls for a 15.6 p.c attain, followed by 2-4 percent expansion above the equilibrium of the 12 months.

Chain Scales

By the conclude of 2023, CBRE forecasts all chain scales to have surpassed their respective 2019 RevPAR concentrations. Overall economy and midscale inns recovered to 2019 ranges in 2021. Closures, better rents and displacements from shelters will continue on to shift persons from properties and flats to lower-priced motels supplying weekly and month to month costs.

Luxurious and upper-upscale houses have lagged in restoration due to the fact of their dependence on unique company and group need. Resorts that operate in these segments will not obtain RevPAR restoration till the close of 2023.


CBRE prepares Hotel Horizons® forecasts for 65 of the biggest marketplaces in the U.S. By year-end 2023, 53 of the 65 Horizons® marketplaces are predicted to have arrived at, or surpassed, their 2019 RevPAR degrees. That leaves 12 additional to get better in 2024 or further than. The greater part of markets lagging in restoration are in northern California, the higher-Midwest, and alongside the northeast corridor from Washington, D.C. by means of New York.

At the other stop of the spectrum, the leisure-centric places of Savannah, Miami, St. Petersburg and the Coachella Valley in California are forecast to exceed their 2019 RevPAR degrees by more than 20 per cent in 2023.

The Financial system

CBRE’s Hotel Horizons® forecasts are centered on economic assumptions geared up by CBRE Econometric Advisors (CBRE EA). As of October 2022, CBRE EA expected the adhering to for the U.S. overall economy in 2023.

A Recession

CBRE EA anticipates that a average economic downturn will past as a result of the first 50 % of 2023 for the next causes:

  • The vital bring about of this downturn is the Fed’s aggressive price hikes providing its intended results.
  • Higher family debt costs are weighing on usage of huge-ticket products, these kinds of as housing and reportedly autos.
  • A robust USD will impede exports.
  • Larger company value of cash is forcing firms to shelve enlargement strategies and layoff bulletins are increasing. This will soften the labor industry by using a slipping task openings fee in the near term, and the unemployment level ought to boost to 5 % by 2024.


The speed of once-a-year inflation likely peaked in the course of the summer months of 2022. Transferring into autumn, easing commodity and purchaser goods prices are weighing on CPI. The greatest component of CPI—housing—is also peaking. Some month-to-month knowledge factors recommend that each rental and for-sale costs are falling. However, the Fed stays vigilant about soaring expert services prices and the prospect of embedded inflation. This should preserve the Fed Funds Rate trending upward by way of mid-2023 and peaking north of 4.5 percent. In truth, this outlook is predicated on inflation decelerating to 3.5 per cent by yr-close 2023. It is totally plausible that inflation could continue to be stubbornly high, which would trigger a more powerful response from the Fed and a more unpleasant recession.

It really should be pointed out that the CBRE lodging forecasts introduced in this article do not ponder a international war, a pervasive recession or a a lot more acute COVID variant.

This write-up was originally published in the January 2023 version of Lodging and has been shared on HFTP Hook up for the profit of HFTP hotel finance associates.

Rachael Rothman is head of CBRE Inns Investigate and Knowledge Analytics. Matt Mowell is senior economist at CBRE Econometric Advisors. To receive CBRE’s Resort Horizons® forecast stories, make sure you go to This posting was posted in the January 2023 version of Lodging.