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","CBRE's new outlook extends into 2022, given the likelihood that corporate travel budgets will remain constrained next year.","Earlier this year, the lodging outlook had been brighter due to strong leisure demand, boosting summer occupancy levels beyond expectations at US hotels. But the emergence of the Delta variant sapped momentum from more lucrative business travel, giving rise to a concerning \"second-derivative\" market condition in which the recovery continues but at a slowing pace.","<div class=\"paywall-content\">\"The Delta variant and increasing number of COVID infections led to delays in 'return to office' plans at many firms and coincided with the start of the 2022 travel-budgeting season,\" said Rachael Rothman, CBRE's head of hotel research & data analytics. \"Unfortunately, for business centric hotels, the rebound in business travel expected in September of 2021 is now delayed and will likely have a ripple effect into 2022's corporate travel budgets.\"","CBRE forecasts that US hotels will achieve a 2021 annual occupancy level of 54%, along with an average daily rate (ADR) of $112.85. The resulting revenue per available room (RevPAR) of $60.91 will be 41.7% greater than the annual RevPAR value of $42.97 recorded in 2020. However, that's still 29.3% less than the $86.16 RevPAR posted in 2019.","Lenders are Being 'Very Cautious'","Kyle B. McDonough, principal and co-founder of Tower Capital, tells GlobeSt, \"Banks are still evaluating their hotel portfolios and have been seeing declines in occupancy trends due to the Delta variant. ","\"Capital is selective but flowing into hotels in 'A' locations that have shown strong performance numbers compared to 2019.\"","McDonough said he's seeing some hotels that are beating their 2019 numbers, such as leisure hotels in \"good\" markets and limited-service hotels located along highways such as Marriotts, Comfort Inns and Hiltons, \"but there's a large group of hotels that are still struggling.\"","Hotel construction debt is still hard to come by as lenders \"are being very cautious,\" he said. \"There have been some hotels that have been securitized lately. They want to understand how the property did in 2019 and how it is doing based on trailing 3 months, 6 months, and 12 months.","\"Ideally, they are looking for strong flags that had above an 11% debt yield on 2019 numbers. Lenders may seek to have a debt service reserve and leverage will max out around 65% with pricing in the mid 3's to mid 4's inclusive of libor, their floor rate and the spread.\"","With bridge financing, he said, \"they are seeking hotels that have performed well historically, may have an upcoming PIP (Property Improvement Plan) and are looking for strong flags in good locations.\"","Investors Pushing Pricing on Most Attractive Assets","Coming out of Q3, investor enthusiasm, nonetheless, remains.","JLL Hotels & Hospitality Global CEO Gilda Perez-Alvarado, tells GlobeSt, \"While there is additional uncertainty surrounding the recovery of group and business demand due to the spread of the delta variant, hotel capital markets observed additional momentum in Q3 2021. As of YTD Q3 2021, U.S. hotel investment volume totaled $20.5 billion, a 294% increase over the same period in 2020 and 6% above YTD Q3 2019 levels.","\"Traditional and non-traditional hotel investors are pushing pricing on the most attractive assets, including luxury hotels and assets situated in resort, leisure focused destinations. As evidence, in 2021 four luxury/resort assets have sold at an average price per key of $1.0M+.\"","Spread compression and greater liquidity in the hotel debt markets has accelerated since early 2021, JLL reported, which has supported the pace of transaction activity through the year. Q4 is expected to see a similar level of activity as Q3. ","\"Investors will continue being attracted to hotels in leisure/resort destinations, albeit we expect to see an increasing appetite for assets in urban markets available at an attractive basis,\" Perez-Alvarado said.","Dallas, New Orleans, San Antonio Could Be First to Break Out","Convention travel will resume first in markets with low operating costs, inexpensive airlift, and relatively fewer health restrictions, according to CBRE's report. Given the wide-ranging availability of convention space, planners will consider destinations with warm weather and low operating costs, including Dallas, New Orleans, San Antonio, Las Vegas and Orlando, among others.","For 2022, CBRE expects leisure demand will continue to boost the performance of properties in resort and remote locations, supplemented by growth in \"bleisure\" travel, which combines business and leisure pursuits. However, anecdotal conversations reveal that the Delta variant is having a negative impact on 2022 corporate-travel budgets. Thus, demand for meeting-related travel may lag that of previous years, but it also stands to provide a near-term benefit to markets with lower operating costs, warmer weather, and less restrictive health regulations. CBRE is forecasting an occupancy gain of 8% in 2022, plus a 7.1% boost to ADR. The net result is a 15.6% forecast increase in RevPAR for the year.","Because 75% to 80% of a hotel's performance is dictated by local economic and market factors, the dynamics of their municipalities can significantly impact the pace of recovery for a given destination.","\"In general, Sunbelt cities and drive-to leisure destinations are expected to perform the best, while group-oriented hotels, northern markets, and global gateway cities reliant on inbound international travel are projected to lag in performance,\" said Bram Gallagher, senior hotel economist with CBRE Hotels Research. \"The pace of recovery for business and group demand is top of mind for most hoteliers.\"","Urban Core Hotels Could Continue to Struggle","CBRE anticipates that urban-core hotels in high-cost markets will continue to see hampered demand due to the delayed return to office and the \"great migration south\" that took place during the pandemic. Business travelers likely will take fewer but longer trips to avoid COVID flight exposure and extend their trips in leisure markets to incorporate shoulder stays. Shoulder stays are business trips that the traveler extends for leisure time.","Beyond 2022, CBRE forecasts the US national occupancy level to approach the long-run average of 62% in 2023. However, occupancy isn't expected to return to its lofty pre-COVID rates in the foreseeable future, given that many general managers are prioritizing rate gains despite the potential resulting drop in occupancy. CBRE anticipates that nominal ADR levels will reach the prior peak by Q2 2023. On a combined basis, the improvements in ADR and occupancy should lead to a full recovery in nominal RevPAR by 2024.</div>"],"slides":[],"video":null},"articlePackages":null,"youmightlike":[{"uri":"/2025/07/11/omaha-multifamily-vacancy-spikes-as-rent-growth-slows/","title":"Omaha Multifamily Vacancy Spikes as Rent Growth Slows","byline":"Anthony Russo","prettyDate":"July 11, 2025","readtime":"2","image":{"uri":"https://k2-prod-alm.s3.us-east-1.amazonaws.com/brightspot/f2/83/89fae89443be8f2103687f341975/omaha-nebraska-article-202507091551.jpg","width":"620","height":"372"},"summary":"More supply is entering the market. 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