LARC’s outlook for 2021 improves based on strong summer

Lodging Analytics Research and Consulting (LARC) expects U.S. RevPAR to increase by 49.9% in 2021 and increase at a 16.8% CAGR from 2020 through 2025 (five-year outlook), according to the company’s U.S. Lodging Industry and Market Outlook—September 2021. LARC also anticipates U.S. hotel property values to increase 19.5% in 2021 and increase at a 7% CAGR from 2020 through 2025. It forecasts ADR to recover to 2019 levels by the end of 2022, with RevPAR, hotel EBITDA and asset values reaching 2019 levels in 2023 and occupancy in 2024.

With regards to 2021, LARC’s outlook for lodging fundamentals has improved as the summer leisure season has been even stronger than its already elevated expectations, particularly related to ADRs. However, it is essentially a pull forward of growth from later years, as the longer-term outlook for RevPAR is only slightly higher than last quarter’s.

Market outlooks
LARC continues to expect the various demand segments of the hotel business to recover in the following order: drive-to leisure, fly-to domestic leisure, domestic business travel, large citywide conventions, small in-house group, international business travel and international leisure. Therefore, markets with a greater concentration of hotel demand from the leisure segments and less from international and in-house groups are likely to recover relatively faster.

2021 (relative to 2019)
Top markets for RevPAR growth:
Norfolk, VA; Miami; Tampa, FL; Phoenix and San Diego
Bottom markets for RevPAR growth:
San Francisco; Boston; New York; Washington, DC; and Seattle

2022 (year-over-year)
Top markets for RevPAR growth:
San Francisco; Boston; Washington, DC; New Orleans; and Minneapolis
Bottom markets for RevPAR growth:
Norfolk, VA; Miami; Tampa; San Diego; and St. Louis

2019-2025 outlook
Top markets for RevPAR growth:
Miami; Tampa, FL; Denver; Honolulu; and Las Vegas
Bottom markets for RevPAR growth:
San Francisco, Detroit, Houston, Boston and Chicago

Top markets for value change:
Tampa, FL; Phoenix; Denver; Los Angeles; and Nashville
Bottom markets for value change:
San Francisco, New York, Chicago, St. Louis and Detroit

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