Global hotel revenue per available room (RevPAR) has risen by 12.8% through the first eight months of 2024 compared to pre-pandemic 2019 levels. While overall performance remains strong, a slowdown in leisure travel has dampened growth, particularly in the United States.

Despite these challenges, other segments like business and international travel are providing a buffer, and Europe continues to show strong performance.

Mixed performance across regions

Europe has been a standout performer, with RevPAR growth soaring by 6.3 percentage points over the last quarter. This is largely driven by events like the Paris Olympics, which have boosted tourism and hotel performance in the region.

According to JLL’s Global Real Estate Perspective, “Europe’s tourism sector is capitalising on significant international events, ensuring continued robust performance in 2024.”

In stark contrast, Asia Pacific has faced difficulties in regaining pre-pandemic demand. Despite the reopening of all borders by late 2023, the region’s year-to-date RevPAR remains 10.7% below 2019 levels.

Meanwhile, in the Americas, the decline in consumer savings is having a notable impact on leisure travel, contributing to a slowdown in RevPAR growth.

However, the recent Federal Reserve rate cuts are expected to provide a boost to domestic travel, which could help stabilise the market over the medium term.

Shifting travel trends and slowing supply growth

Looking forward to 2025, the hotel industry is expected to normalise, with annualised growth predicted to dip below 4%.

JLL’s analysis suggests that while leisure travel, the key driver of post-pandemic demand, will continue to moderate, corporate and group travel will help maintain stable demand.

“Limited supply growth, driven by high development costs, will help operators maintain elevated rates and safeguard against rising operational costs,” says JLL.

This trend is anticipated to drive increased asset transactions, particularly in the luxury sector, as brands seek to expand their portfolios. The future of global hotel supply shows a slowing growth trajectory, with an expected annual increase of only 2.4% over the next five years.

This marks a decline of 180 basis points compared to the long-term average, primarily due to a significant drop in the number of rooms under construction since 2019.

As construction costs remain high and supply chain disruptions persist, new developments are limited to projects with strong investor backing. Urban core markets and locations with high barriers to entry are likely to benefit the most from this reduced supply growth.

Long-term outlook: Middle East and India show promise

Despite the slowing supply growth globally, certain regions are expected to see more rapid expansion. The Middle East and India are anticipated to experience substantial growth, attracting increased global investor interest in the coming years.

As JLL points out, “These regions offer high potential for hotel performance, given their growing economies and increasing demand for tourism infrastructure.”

Ultimately, while hotel performance in 2024 has exceeded expectations in many regions, challenges persist, particularly in the face of declining leisure travel.

The outlook for 2025 suggests a return to more moderate growth, though slowing supply growth and increasing investor interest in luxury assets will support long-term market stability.