Hotel asset managers Carmen Almos, founder/CEO, Ashburton Hospitality; Chad F. Sorensen, managing director/CEO, CHMWarnick, and incoming president, Hospitality Asset Managers Association (HAMA); and Adam Tegge, VP, acquisitions, Ashford Inc., are not in agreement as to how the industry will perform in 2025. Hotel Business caught up with the executives to discuss their forecasts and to find out why demand is an industry concern among their peers.
—Adam Perkowsky
Did 2024 live up to your expectations? Why or why not?
Almos: The optimism at the start of 2024 gave way to concerns as transient demand softened in Q1, with travelers seeking greater discounts and showing heightened cost-consciousness. This trend persisted through the peak summer months, signaling a shift in travel behavior despite continued activity. While overall expectations for 2024 fell short due to weaker transient demand, stronger-than-anticipated group and corporate demand helped offset some of the softness.
Sorensen: 2024 was generally a tough year all the way around for the industry for different reasons depending on the type of hotel and market. Group demand continued to help offset shortfalls in the business transient segment, but group spend moderated compared to 2023. A primary difference between 2023 and 2024 was the ability to control expenses to maintain flow to the bottom line when revenues fell short of budget. That was especially true in the back half of the year. That tells me that operations are stabilizing into the new norm, whereas 2023 was still very volatile, especially with regard to staffing and labor expenses. This new norm has allowed us to get back to work with our operators on being more strategic and finding unique ways to both drive top-line revenues and preserve the bottom line.
Chad Sorensen, CHMWarnick
Tegge: Broadly, yes. Any softening in the resort markets was offset by gains in the urban locations.
According to the HAMA Fall Survey, nearly two-thirds of respondents cited demand as the top industry concern. Why do you think that is?
Almos: The post-COVID surge in travel demand was unprecedented, with hotels enjoying strong occupancy and surprisingly high ADR driven by inflation and travelers’ eagerness to explore. While demand remains above 2019 levels, it has softened compared to the peaks of 2022 and 2023, as travelers shift from domestic destinations like Miami to international hotspots. With luxury and upper-midscale rates converging, guests now have a broader selection of international accommodations, while domestic demand declines as global travel restrictions ease.
Sorensen: I believe that there are a number of reasons, but one of the primary reasons is that margins have meaningfully eroded post-pandemic due to increased labor costs and inflation. Everything costs more, and that cannot be solved solely through strong ADR. We need growth from both parts of the RevPAR equation, ADR and occupancy. Hence, muted demand growth is problematic. As an industry, we are fortunate that supply has stayed in check with low demand growth, but that is only going to last so long. As the capital markets correct, supply will increase, and we need demand growth to stay in lockstep.
Tegge: There are several challenges anticipated for 2025. Key factors include market dynamics, shifting consumer demand and the recovery of the business travel segment, which remains a focal point. Meanwhile, the leisure segment continues to thrive. Brands have adopted an aggressive strategy regarding the timing and scope of license-renewal PIPs and operational standards. Coupled with rising labor costs across most markets, this has added further pressure on profitability. In response, we have taken a more aggressive stance in asset management and have sought innovative ways to drive ancillary revenue streams.
Adam Tegge, Ashord Inc.
What is your forecast for 2025?
Almos: Optimism remains for 2025 hotel performance, though growth in occupancy is expected to be muted, with ADR continuing to drive gains. Positive momentum in group and corporate on-the-books activity should support overall performance, but growth is stabilizing compared to 2023 and 2024, marking the end of the post-COVID surge.
Sorensen: I think we have our work cut out for us in 2025, but I believe that this budget season is the first, post-pandemic, in which we have solid control of our destiny. If you have been paying attention, you should have a strong understanding of relative market fundamentals, which, in turn, should allow for a strategic approach to 2025, regardless of demand headwinds, flatlined business travel, etc. As asset managers, these are the times that we particularly shine and our assets usually outperform the market despite macro-level market conditions.
Tegge: Year-over-year industry growth is very market-dependent. We are very bullish on Washington, DC, and the majority of urban locations with the continual improvement in convention pace. There is still concern about the short-term market recovery of San Francisco and Los Angeles. I would anticipate an overall RevPAR growth of 3%-4% in 2025.
