Five questions for the hotel industry to ponder entering 2023
Jan Freitag With a mild recession on the horizon for 2023, hotel owners and operators are looking forward to a year when the ongoing recovery intersects with an economic slowdown. Here are five questions that will be on investors’ and managers’ minds as the hotel industry embarks on the new year. 1. Can Average Daily Rate Growth Continue or Will the Recession Stop Growth? Average Daily Rate, or ADR, in October was 15% higher than 2021 and 16.8% higher than in 2019. But can this growth continue? The STR forecast answers this question with a resounding yes. The current iteration calls for 1.7% ADR growth in 2023. Looking back over the past 24 months, the upside was strong pricing power. It became obvious quickly that room rate discounts did not induce demand so operators who stuck to their rates are now in a much better position to drive ADR. How much could a recession matter? It seems like the old adage of two consecutive quarters of GDP decline, which economic observers informally use ...