Recession Watch: Hotel Chain Scale Analysis 2023

Report Overview

This report looks at hotel performance by chain scale in times of crisis and recession in the U.S., as well as the comparison of unit growth strategies of major hotel brands post the 2008/9 Great Financial Crisis versus their current pipelines.

The macroeconomic outlook for the U.S. in 2023 appears bleak – rising interest rates, squeezed consumer spending, and a looming recession. However, the hotel and travel sector remains optimistic, with tailwinds from the recovery of cross-border, group, and business travel, as well as a structural shift in consumer spending towards experiences, expected to boost the industry. There are still reasons for caution however, with the recovery pace slowing down versus 2022 and consumer spending taking a hit from depleted savings and lessened pent-up demand.

CEOs of major hotel brands predict a "moderate recessionary environment” in the back half of 2023 in the U.S., as said by Chris Nasetta, CEO of Hilton during Q4 2022 earnings. This may see plateauing of RevPAR (Revenue per Available Room) and ADR (Average Daily Rate) growth rates. Previous economic cycles can guide the industry on areas that will remain most resilient, such as midscale hotels, and why some chain scales, such as luxury, are expected to remain strong in a potential 2023 recession unlike what has been seen in prior downturns.

This report also dives into the development strategies of the major hotel brands, looking in particular at the white-space opportunities for future growth – notably the luxury space which has piqued investor interest through the pandemic, and also the premium economy segment which has seen a flurry of new brand launches in the last few months.

What You'll Learn From This Report

• How do different hotel chain scales perform in times of recession

• Why a potential recession in the U.S. in 2023 might be different to prior recessions

• Why the hotel industry can hope to stay optimistic in the face of economic uncertainty

• The development strategies of major hotel brands by looking at future hotel pipelines by chain scale, in particularly the luxury and premium economy segment