March 31, 2022
A Pictorial Update on Our Latest Thoughts and the Facts and Figures Influencing Our Industry

The CBRE Hotels Research State of the Union showcases a pictorial review of current hotel trends, leading and coincident indicators of hotel demand, and an update on cost pressures and margin flow-through. The report showcases current demand trends, as well as fundamentals by segment, location type and chain scale. The report also provides a brief update on short-term rental, group business, and capital market trends, the transaction market, the impact of virtual work and the outlook for office vacancy.

Key Takeaways

 

  • 2022 and 2023 GDP estimates have been negatively revised from 3.5% to 2.4% and 2.1% to 1.9%, respectively. Continued rate increases could be a headwind, as well as rising inflation and supply chain difficulties. [4]
  • Leisure travel from Spring Break positively impacted March performance data compared to January and February which are less leisure-oriented. We are optimistic about the upcoming leisure-driven summer months. [10,11,13]
  • Chain scale performance showed improvement in the upper-priced segments, but we are beginning to see some softening in the performance of lower-priced hotels. [14, 15]
  • Market volatility is climbing due to high inflation rates as well as uncertainty brought on by the conflict in Ukraine.  There is some concern that rising airfares and higher gas prices could affect future travel. However, TSA throughput and Google trends data still suggest a recovering trend. [23, 25-27, 30, 32, 33]
  • Despite a pullback in January, international travel data in February showed improvement for major gateway markets. However, west coast Asia-dependent markets continue to lag. [20, 21]
  • Although higher inflation translates into higher ADR, inflation is likely to put pressure on hotel margins in the near term. Longer-term, higher construction input costs including increased construction wages should moderate supply growth supporting ADR growth. [35-43]
  • CMBS delinquency continues to fall as hotels begin to benefit from improvements in travel over February and March.[45-47]


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Contact


Rachael Rothman
Head of Hotels Research
CBRE Hotels
[email protected]

Will Webster
Sr. Research Analyst
CBRE Hotels
[email protected]