RevPAR by Tier
Lower Tier Total Upper Tier
Occupancy by Tier
Lower Tier Total Upper Tier
120 70 %
100 60 %
80 50 %
60 40 %
40 40 %
20 |
|
|
|
|
|
|
20 % |
|
|
|
|
|
|
1Q2019 |
1Q2020 |
1Q2021 |
1Q2022 |
1Q2023 * |
1Q2024 * |
1Q2025 * |
1Q2019 |
1Q2020 |
1Q2021 |
1Q2022 |
1Q2023 * |
1Q2024 * |
1Q2025 * |
* Forecasted |
Source : Moody ’ s Analytics CRE |
room ( RevPAR ) at luxury properties has remained above its counterparts since mid- 2020 and is expected to do so for the forecast period . More interestingly , while RevPAR fell sharply again in the second half of 2021 for the lower tier , which corresponded to the rise of the delta and omicron variants , upper tier assets managed to maintain their gains in 2021 , with minimal impact on RevPAR .
Occupancy , however , tells a different story . While upper tier properties typically have the highest occupancy rates , they are also the most severely affected by downturns in demand . This is likely because upper tier hotels simply do not have the margins to lower average daily rates to bolster occupancy , since they face much higher expense ratios ( upwards of 75 percent ) than their limitedor select-service lower tier counterparts ( approximately 65 percent or less ).
Looking to the future of the sector , Moody ’ s Analytics CRE predicts that in 2022 and 2023 , RevPAR for the upper tier is expected to grow at a faster rate than that of lower tier properties . For the upper tier , RevPAR recovered to just shy of $ 100 , a threshold it is expected to cross in the second quarter of 2022 as the busy summer travel season gets underway . Similarly , across all tiers , occupancy is expected to grow steadily in 2022 and into 2023 , before leveling off and remaining stable after the recovery growth period .
Ermengarde Jabir , Ph . D . Economist with Moody ’ s Analytics Reis .
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CIREMAGAZINE . COM COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE 13