Lodging tailwinds to overpower headwinds

The hotel sector continues its recovery; global revenue per available room (RevPar) has now recovered to 92.6% relative to the same period in 2019. And despite the economic headwinds, Q4 produced the highest performance of the year. The recovery is strongest in the Americas and EMEA, with green shoots emerging in Asia Pacific in tandem with China’s recent reopening.

Outperforming all other regions, the Americas continued to surpass 2019 levels across all its underlying subregions. Re-emerging group and corporate demand is fueling a boost in performance, particularly in the top urban markets. Despite macroeconomic challenges, Europe remains the front-runner of international travel, welcoming almost 70% of the world total and hitting 81% of pre-pandemic levels during the fourth quarter. Meanwhile, the delayed loosening of Covid restrictions has largely limited Asia Pacific’s overall hotel performance recovery, with total regional RevPAR recovered 68% relative to 2019. However, the re-opening of its international borders will help to lift performance across the region in 2023.

Future trends: Blurring lines between living, work and travel 

Outlook for 2023: The improvement in global lodging fundamentals will continue to accelerate, underpinned by China’s reopening and the re-emergence of international travel. Muted supply growth, particularly in the Americas and Europe, will create opportunities to drive rates further, allowing hotels to increase profitability and mitigate ongoing margin pressures.

Long-term: Consumers’ appetite for experiences and travel will bring lodging demand to new highs, while business and group travel’s revival will accelerate. Hotels are set to benefit from the proliferation of more flexible working arrangements, fueling leisure demand. Look for the lines between living, work and travel to continue to blur, creating opportunities for traditional hotel brands to enter new verticals, thereby increasing their share of travelers’ wallets.