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With Hotel Rates, a Better View on the Horizon

2021 is likely to be more of a buyer's market than any recent time.

As hotels are presently enjoying 100 consecutive months of rising revenue per available room and economic indicators are signaling strength into late 2020, many meeting and event planners have long had to play defense in their negotiations with hotels, using creative means to keep costs in check.
However, planners might want to start negotiating for their 2021 events armed with the most recent market analysis from CBRE Hotels America Research, which predicts that hotels will struggle to gain much in RevPAR that year because of a projected economic slowdown along with strong hotel-inventory growth.
Increases in RevPAR can come in two ways: a higher occupancy rate, or a rise in the average daily rate. From 2012 to 2018, both elements climbed steadily, producing the very healthy RevPAR numbers seen today. In the past year, the rise in occupancy rate slowed because of strong guest-room growth, but the average daily rate has risen enough to maintain RevPAR increases that satisfy property managers and owners. In fact, CBRE projects a RevPAR rise of 2.5 percent this year and 2.0 percent in 2020.
Come 2021, though, a drop in hotel demand that follows a projected economic slowdown (estimated 2021 GDP growth is just 0.7 percent, versus 2.4 percent this year) will likely result in RevPAR at meetings-focused hotels rising only 1.3 percent, according to CBRE. Aside from peak periods in popular meeting destinations, this means that planners could have some leverage to negotiate more favorably for various elements of their 2021 events.
Another factor planners can consider for 2021 meetings is the rate of RevPAR growth among upper-midscale and upscale hotels—which often act as overflow properties for meetings—will be just 0.8 percent because so much new inventory has come into those market segments recently. As a result, planners who need room blocks at overflow properties should have some leverage as well.

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