December 20, 2019
Boutique and lifestyle hotels are anticipated to remain a favored asset class among developers and owners.  However, like the greater U.S. lodging industry, their performance is expected to be muted in 2020.

The pace of RevPAR growth is forecast to pick up in four of the seven sub-segments next year.  Legacy brands – upper priced boutique properties are forecast to exhibit the greatest RevPAR growth, after a decline in 2019.  Conversely, the legacy brands – lower priced properties are projected to suffer a RevPAR decline during 2020, after enjoying relatively strong RevPAR growth in 2019.

The supply and demand for boutique and lifestyle hotels appears to be balanced for 2020, thus leading to stable occupancy levels.  However, the prospects for room rate growth during the year remain limited.  Legacy brands – upper priced and boutique-lifestyle – lower priced brands are forecast to post ADR increases up to nearly twice that of the overall U.S. lodging industry.  On the other hand, soft brands – lower priced are anticipated to exhibit the least ADR growth.  In 2020, soft brand - upper priced boutique hotels are forecast to achieve the greatest occupancy levels, while boutique-lifestyle - upper priced hotels are projected to achieve the highest ADR.

With annual RevPAR changes forecast to range from -0.4 to 1.8% over the next two years, the ability to grow profits will remain challenging for the average boutique hotel.
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CBRE, in conjunction with the Boutique and Lifestyle Leaders Association, prepares quarterly forecast reports for seven sub-categories of this unique segment of the U.S. lodging industry.  To subscribe to CBRE’s Trends® and Expectations for Boutique and Lifestyle Hotels report, please click here.