Hotel market fundamentals to return to pre-pandemic levels in 2023

Hotel market fundamentals to return to pre-pandemic levels in 2023

This year few countries still have stringent Covid-19 measures in place and, as a result, travel and tourism are gradually returning to their pre-pandemic normality. In addition, hotel market fundamentals should regain their 2019 levels this year, with some regions, such as the Americas already showing higher figures. 

Pent-up demand bolsters RevPAR

According to the CBRE 2023 Global Hotels Outlook, pent-up demand and the loosening of travel restrictions lie behind the resurgence in hotel market fundamentals this year. This report points out that RevPAR has recovered in many regions and “should continue to grow in 2023”. 

These circumstances are particularly true for the Asia-Pacific region, where the recent return of Chinese travellers will boost hotel occupancy rates. In Europe, CBRE predicts that increases in average daily rate (ADR) will help “offset supply chain and labour shortages” in the continent. 

RevPAR levels in 2022

Last year, all regions saw a marked improvement in RevPAR levels. The most spectacular took place in the Americas, where this hotel market fundamental rose by 108% compared to 2019, taking RevPAR above pre-pandemic levels. For example, RevPAR in Brazil surpassed 2019 rates in September last year.

In Europe, the recovery was close to completion, with hotels in the region performing at 97% of 2019 levels. While in Asia-Pacific, RevPAR registered more timid results as travel restrictions continued to hold the tourist sector back. As a result, this region stood at just 68% of pre-pandemic figures. 

However, CBRE forecasts that “worldwide normalization of global travel patterns” will take 2023 RevPAR levels to their 2019 results for all regions. Nevertheless, the report points out that the sector faces several headwinds, namely high inflation in some parts of the world and shifts in trends such as work location. 

Hotel market fundamentals in the Americas 

This region registered the best performance last year and is set to repeat the excellent results in 2023. As the graphic below illustrates, all hotel market fundamentals in the Americas except for occupancy (OCC) and air passengers returned to 2019 levels last year. RevPar showed a particularly sharp uptick. 

graph showing hotel market fundamentals in the Americas


This year, all are predicted to go beyond pre-pandemic figures, with RevPar set to experience further solid growth. 

Best asset choice for 2023

Furthermore, CBRE believes that “hotels will have the strongest top-line growth” this year among all property asset types. Consequently, the property consultancy company forecasts that this growth (5.8%) plus solid consumer demand will “make hotels an asset class of choice for investors” in 2023. 

CBRE concurs with JLL in this prediction. In their latest report, JLL said that “hotel investment is shaping up for an exciting year in 2023”.

(Source: CBRE)