Hoteliers project an overall sense of normalization across the board in 2024, but it's hard to say just yet whether the trends will permanently result in a new normal.
Following robust leisure demand over the past few years, Mission Hill Hospitality Managing Director Mike Wilbert projects the demand segment will reset to normalized levels in 2024.
Gilbert Arredondo, senior vice president of revenue strategy for Remington Hospitality, feels the industry is in the new normal and there's no going backward.
Harry Carr, senior vice president of revenue management at Pivot, said although the industry is stabilized, it's difficult to declare the current conditions as the new normal.
"We encourage our revenue leaders to stay hungry and stay humble because the market is evolving," he said.
Harry Carr, Senior Vice President, Revenue Management, Pivot
"The overall projection for 2024 is for occupancy to remain flat with a small increase in ADR. Overall growth is averaging 2%. Some of the best-performing markets in 2022 and 2023 will see revenue per available room decline, most notably South Florida.
"We feel that the industry is stabilized but it is hard to say that the current conditions are the new normal. Business travel remains at 10% to 20% below 2019 levels. Inbound international travel still lags 15% below 2019 levels. Airline capacity has improved but prices remain high.
"Small groups business is back but large conferences are still inconsistent. We encourage our revenue leaders to stay hungry and stay humble because the market is still evolving.
"2023 is a baseline, not a one-time occurrence. With inflation still a concern, rate declines are not likely to happen on a large scale. Segmentation will shift. Instead of looking to 2019 as the benchmark, 2023 will be the new standard."
Chris Green, President, Remington Hospitality
"I think that 2024 could be the most normal year of what we've had in a while. Business transient is going to be back. Group is going to be really good. It's going to be a solid year. We're just back to what hotel operations is."
Nancy Obstler, Vice President of Sales, Marketing and Revenue, Raines
"I feel like from the summer of 2022 to right when we hit this summer, that's where all that peak travel was. After that, the second half started — in some of these destination markets — you could just see the demand start to get a little softer. People start changing their rates and it was all about if you thought you could still get it, you're probably giving up occupancy for rate.
"We have been analyzing and we have seen a leveling out. We are planning on the trends of what started in September to continue into 2024. Whatever those indices are, we are taking them into '24 with us.
"It depends on the market. And what we've seen, they're all a little bit different. Some might be a little more light [on] occupancy, some we're looking at a flip. But not the kind of growth that was there the year before.
"We can already see the pace is not as robust as we went into 2023, and that's really on the transient side of things. On the flip side, over the past few months, we've seen an uptick in companies looking a little further out to book actual corporate groups, which signs all point back to normalcy.
"Maybe companies [are] spending more of that budget for in-person meetings. People are looking mid- to end of 2024, which is a little bit of a bright light for an uptick in corporate group demand."
Gilbert Arredondo, Senior Vice President, Revenue Strategy, Remington Hospitality
"We're in the new normal. I don't think we'll go backwards, but I think the costs will slow. I think we're already starting to see that in the economy. We've seen gas prices start to fall, especially over the last two months. So we're starting to see macroeconomic signs of a slowing down. We're still seeing strong GDP growth ... so now we have GDP exceeding inflation, which is a very good thing. We're seeing a rebound in the markets and so forth from that. But the hotel industry lags a little bit behind the macroeconomy of the United States. It'll probably take us a few more months to realize that normalization in costs.
"By the time we get around to [second quarter] 2024, we should start to see some more normalization of year-over-year costs and not that exponential growth that we've seen, especially labor costs that have gone up so much.
"2024, it's going to be a fun year. Now that we're kind of back to that year-over-year basis to a degree, I think it's really going to come down to in a lot of markets how well can you be strategic, how well can you plan out."
Mike Wilbert, Managing Director, Mission Hill Hospitality
"High level, we expect the demand to normalize in '24 across the board. Leisure will reset at more normalized levels. We expect group and [business-transient demand] to climb back to a more normalized level.
"The backdrop for that is if the world keeps pushing forward and there's no real setback or recession, then we do believe '24 should be normalized across the board."
Seonju Lawrence, Vice President of Revenue Strategy, Mission Hill Hospitality
"Looking back, this year was RevPAR growth. And ADR was mostly front-loaded because there was a significant demand rise during quarter one [2023] compared to quarter one 2022 when omicron occurred.
"We've been talking about normalized demand but returning group business created additional demand throughout the year.
"Most markets in the U.S. are expected to recover or surpass pre-pandemic RevPAR levels by end of 2023.
"I think the recession worries have decreased, so a 2024 RevPAR increase will most likely be driven by the ADR increase and more back-loaded. That's what we are anticipating."