The Hospitality Industry Sentiment survey is STR’s global quarterly study covering the experiences and expectations of travel and hotel industry professionals. With the first full year of the HIS survey in the books, several strong patterns have emerged - and a few surprises as well.
To take the pulse of the industry overall, the group asked its global community of industry professionals to rate their general business confidence over the next three months (short-term), the next year (medium-term) and the next two years (long-term). Ratings for the long term in particular remain optimistic, with 51% of respondents indicating their confidence rate as an “8” or higher on a 10-point scale.
However, trending these results over the first year of the survey shows a slow, but steady decline in confidence ratings for each of the time spans.
While not a severe cause for concern, this trend does seem to mirror the moderate growth in wariness of an economic recession, as explored in the Q3 2023 survey. But there is some good news on that front, as recession fears among all respondents worldwide have tapered off since the last survey. In fact, out of all possibilities on the “industry challenges” list, “concerns regarding a potential recession” dropped further than any other item between the past two surveys.
In terms of ranking industry challenges, recession fears do still land as the third most prevalent concern behind labor cost and supply challenges. Energy and utility costs are also ticking slightly upward (particularly in Europe and the U.K.), while supply chain challenges and group demand woes are continuing to subside a bit.
In terms of actual hotel performance, the patterns described above do seem to have an impact on expectations for demand forecasting. Across all three hotel demand segments, the percentage of respondents that expect either “strong improvement” or “some improvement” is trending slowly downward. It’s not entirely bleak, however, as the majority of experts still expect growth in both business transient and group demand.
Demand aside, predictions for pricing power seem less affected by any concerns over occupancy growth, recession fears, or other factors. Over 60% of respondents anticipate at least 1-2% year-over-year room rate growth in Q1 2024; and nearly a third of respondents put their predictions at 3-4% growth or higher. By the end of 2024, the proportion swells to 70% of experts predicting rate growth.
Despite the drooping expectations across demand segments, predictions for occupancy are similarly also positive (although not quite as strong as for ADR).
Whether occupancy predictions will remain positive – particularly if leisure, business, and group demand hopes continue to dwindle – remains to be seen.
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