LOS ANGELES -- Predicting the future is always a challenge, but during this year's Americas Lodging Investment Summit (ALIS), a clear contrast in analyst outlook added an extra layer of complexity.
During a panel discussion at the event, held here last week, STR president Amanda Hite was generally upbeat in her outlook for 2024, citing the hotel industry's record-high RevPAR and ADR levels in 2023 and last year's better-than-expected economic landscape.
This year, STR predicts that hotel occupancy will be relatively flat, but that ADR and RevPAR will both grow, by 3.1% and 4.1%, respectively.
And although Hite conceded that the U.S. is likely to see some level of economic slowdown this year as well as some moderating rate growth, she predicted that the U.S. traveler will remain resilient.
"We think the travel economy is going to fare a whole lot better than the general economy this year," Hite said. "The employment level of college-educated professionals continues to grow, and when you look at households earning $100,000 or more, those are the people who are prioritizing travel spend."
Cindy Estis Green, CEO of Kalibri Labs, said that although her outlook was generally in line with STR's, she emphasized that corporate travel's stunted recovery continues to weigh on overall industry performance.
"The leisure demand is still there, and the strength of the rates is actually coming from the leisure side of the equation," she said. "So that's a good thing. But we don't know how sustainable it is. This is the type of business we're not as familiar with as the commercial business that we've kind of lived off of for so many years."
Less upbeat was Laura Resco, director of hotel intelligence for the Americas at HotStats, who pointed to two major "wild cards" that could impact performance in 2024: geopolitical instability and the U.S. presidential election.
"When you have election years, things become a little bit more uncertain," Resco said. "The general business environment becomes a little bit more uncertain, and consumer confidence [does], as well."
And while Ryan Meliker, president of Lodging Analytics Research & Consulting, described his outlook as "relatively positive," he also sounded the alarm over a continued lag in corporate travel recovery as well as the possibility that domestic leisure demand could wane as U.S. travelers continue to favor international trips.
"We saw there was a lot of pent-up demand for traveling overseas, and in 2023, U.S. citizens went abroad at a level 11% above where that level was in 2019," Meliker said.
Meliker also warned of a potential "weakening" U.S. consumer.
"When there's caution surrounding the outlook from the U.S. consumer, they save more and spend less," he said.
Where does the U.S. stand?
Improving the U.S. market's competitiveness as a top tourism destination was also a hot topic on this year's ALIS stage.
Geoff Freeman, CEO of the U.S. Travel Association, told attendees that the U.S. ranks 17 out of the top 18 global destinations in terms of competitiveness for global travelers, according to a report U.S. Travel released this month.
Additionally, he said, the U.S. welcomed 22 million fewer international visitors last year than in 2019.
"Travelers are not choosing to come to the United States, while other countries like Canada, the U.K. and even China are putting in place policies to be far more competitive when it comes to attracting travelers," said Freeman, who added that the need for a larger piece of the international travel pie could become even more critical as U.S. domestic leisure demand begins to moderate and business transient demand continues to struggle.
It's especially critical from a revenue perspective: International visitors spend far more than the average domestic traveler, who U.S. Travel estimates spends around $500 per U.S. trip.
"The average Canadian or Mexican, when they come into the country, spends about $1,200, and the average overseas visitor spends over $4,000 per person per visit," Freeman said. "So, the importance of that traveler is obviously extraordinary. I know in New York, the international traveler accounts for 17% of all visitors and 50% of all spend."
American Hotel & Lodging Association CEO Chip Rogers echoed Freeman's sentiments, placing much of the blame on two primary factors: a relatively strong U.S. dollar and long visa wait times.
"The strength of the U.S. dollar continues to be a hindrance for people to come into the U.S., because we've just become a more expensive market," Rogers said. "Then if you have an opportunity to travel and want to go to the U.S., and then find out you have to wait 400 days [for a visa], you're going to go somewhere else. This is something that needs to be fixed, but we're just not doing so, and the federal government needs to make it a priority."