The Red Lion Hotel in Cromwell.
The Hartford hospitality sector won’t break any records next year, but it will stay healthy and revenues will grow.
That’s according to new research from CBRE’s hotels advisory group. The research states occupancy levels will dip 0.6 percent to 61.5 percent in 2020. At the same time, rooms revenue per available room (RevPAR) is forecast to increase at 1.2 percent to $73.28.
CBRE is projecting a 0.3 percent supply increase and 0.3 percent demand decrease in Hartford for 2020. Average daily rates (ADR) are projected to climb in Hartford; rates are projected to grow 1.8 percent in 2020 to $119.09. Occupancy is expected to decrease by 0.6 percent in 2020.
“Hartford’s RevPar, ADR and supply are forecasted to continue to increase through 2020, while occupancy and demand will decrease in 2020,” Mark VanStekelenburg, managing director of CBRE Hotels, said in a statement.
The Hartford forecast appears roughly in line with national trends. CBRE’s forecast for the change in lodging demand during the year has improved from a 1.8 percent gain in September to a 2 percent increase in its most recent Hotel Horizons issue. The updated outlook calls for the national occupancy rate to remain at the 66.1 percent record level achieved in 2018. This marks the 10th consecutive year without a national occupancy decline.
While supply and demand appear to be balanced, room rate growth potential remains limited. CBRE now is forecasting the annual ADR for U.S. hotels in 2019 to be $131.08, just 0.9 percent over the $129.97 national average in 2018. The net result is a RevPAR increase of only 0.8 percent for the year.
In a low revenue growth environment, hotel operators’ ability to expand profits will be tested, CBRE predicts. Low levels of unemployment continue to put upward pressure on salaries and wages which make up half of the expenses at the typical U.S. property.
CBRE’s inflation forecasts remain below 2 percent through 2022, controlling the cost of the goods and services other than labor. However, with RevPAR growth limited to less than 1 percent, hoteliers must keep expense growth to under 1.5 percent to achieve nominal gains in gross operating profits.
