Minimal Shifts in the Crystal Ball: How suppliers can leverage insight from ALIS and the Lodging Conference to tailor offerings to the hotel industry

As the hotel industry navigates a year marked by both optimism and restraint, the forecasts from January and October 2024 reveal key insights into the shifting landscape for hospitality. These projections show slow but steady recovery tempered by inflation, labor challenges, and cautious investment — a scenario that holds significant implications for suppliers to the hotel sector. Understanding these forecast changes, from modest RevPAR growth to rising operational costs, gives suppliers a powerful tool for fine-tuning their sales and marketing strategies. In an environment where hoteliers are scrutinizing every expense, suppliers who can directly address their evolving needs with targeted solutions will be well-positioned to capture market share and build lasting partnerships. Read on as we dive into the latest industry forecasts, comparing the evolving predictions and revealing how suppliers can strategically align their offerings to meet the moment.

Predictions and Updates: ALIS to Lodging Conference

While the year started on an optimistic note at the Americas Lodging Investment Summit in January where the ALIS number panel shared their predicted forecast, that mood was tempered somewhat by the time analysts presented their updates at the Lodging Conference in October. Below are a few of the similarities and differences between that nine month span.

1. RevPAR and ADR Growth
   January Forecast:
   Amanda Hite (STR) and Ryan Meliker (LARC), panelists on the 2024 ALIS Numbers Panel, anticipated moderate RevPAR, the Revenue Per Available Room, growth of around 3.6% for 2024. This growth was expected across all chain scales but at a pace below historical averages. Average Daily Rate (ADR) was forecasted to grow by 2.8%, reflecting slow recovery in consumer demand and cost pressures on hotels​.

   October Update:
   STR’s outlook in October showed continued slow RevPAR and ADR growth, with rates further impacted by inflation and economic conditions. Isaac Collazo from STR noted that year-to-date RevPAR growth was only 2%, highlighting regional discrepancies, especially in Southern and Western U.S. hotels. This suggests that the earlier RevPAR growth expectations were optimistic, given the slower recovery experienced through 2024.

2. Demand Segments and Channel Performance
   January Forecast:
   Projections indicated corporate transient demand recovery, though still trailing pre-pandemic levels. Group demand was expected to grow strongly by 3% due to higher convention bookings, while domestic leisure demand was predicted to soften as consumers faced economic pressures. Cindy Estis Green (Kalibri Labs) noted that Brand.com channels outperformed other distribution channels, with OTA and GDS showing marginal growth.

   October Update:
   By October, group demand indeed showed recovery, with Collazo reporting steady demand growth in the Northeast and Top 25 markets. However, STR data revealed significant softness in lower-tier hotel demand, suggesting that budget-conscious consumers were further impacted by inflationary pressures, especially in lower-tier markets and leisure-focused properties.

3. Occupancy Rates
   January Forecast:
   LARC’s forecast set 2024 occupancy at 63.7%, an improvement over 2023 but still not reaching 2019 levels, with a slight downturn anticipated in 2025 as demand leveled off. This was a conservative view that expected only gradual gains in occupancy.

   October Update:
   STR’s data confirmed that occupancy growth remained modest and below the anticipated 2019 benchmark. Occupancy for luxury and upper-upscale segments trailed more significantly, while extended-stay segments maintained relatively stronger occupancy levels. This aligns with Ford’s findings on the robust extended-stay pipeline in the U.S.​

4. Profit Margins and Expenses
   January Forecast:
   The outlook warned of a challenging margin environment, with GOPPAR projected to stabilize at levels lower than 2019 due to high labor costs and operating expenses. Laura Resco (HotStats) indicated that the labor shortage would continue, increasing costs and impacting profit margins for operators.

   October Update:
   By October, this forecast had materialized, with high operating costs indeed limiting margin expansion. Ford and Clough emphasized the growing focus on repositioning strategies, aiming to optimize GOP by improving operational efficiencies rather than relying solely on revenue growth

5. Macroeconomic Factors and Investment Climate
   January Forecast:
   With high interest rates and construction costs, January’s panel anticipated a conservative investment climate. The forecast suggested that only well-capitalized projects would move forward, particularly in suburban and extended-stay segments.

   October Update:
   This trend continued through October, with Ford reporting a strong construction pipeline but also cautioning that economic uncertainties and high borrowing costs were stalling many projects. Clough and Ford emphasized that acquisitions and repositioning of existing properties were more appealing than new builds, given the financial landscape.

What’s Next for Suppliers in 2025?

The current hospitality landscape—with slow growth in occupancy and ADR recovery, high operational costs, and a conservative investment climate—calls for hotel service suppliers to refine their sales approach to meet the pressing needs of hoteliers. Suppliers should emphasize solutions that boost operational efficiencies and cut costs, such as energy-saving technologies and automation tools, as these directly address the financial constraints hotels are facing. Demonstrating clear, data-driven ROI through case studies or projected savings will resonate with hotel managers focused on maximizing GOP. Additionally, flexible and customizable offerings, including scalable packages for different property types and flexible payment options, can help suppliers address the diverse recovery patterns across luxury, budget, and extended-stay segments, where specific operational and financial pressures vary significantly.

As hotels look to reposition and maintain asset value, suppliers can strengthen their appeal by promoting products that support these long-term goals. Durable, low-maintenance offerings align with asset management priorities, while sustainable solutions not only reduce expenses through lower utility and waste costs but also enhance brand positioning in response to growing eco-conscious consumer demand. Labor-efficient technologies, such as automated check-in and housekeeping tools, are also essential, given persistent staffing shortages. 

Suppliers should tailor their marketing based on regional and segment-specific trends, as regional economic performance and property type greatly influence hotel needs. By focusing on cost efficiency, sustainability, and targeted flexibility, suppliers can position themselves as strategic partners, helping hotels navigate today’s cautious but opportunity-filled market.

At Continental Contractors, building strong relationships based on trust and integrity is part of who we are and how we do business. We always have the client’s best interests in mind and will continue to share these insights with colleagues, vendors, and suppliers to achieve the best results for our client and also build on the future of hospitality renovation. Together we can build great things.