Houston area hotels will finish the year well ahead of performance in 2023 and are poised for modest growth in 2025, according to a forecast from McCaslin Hotel Consulting.
Texas-based consultants Randy and Patrick McCaslin presented their report this week at the Hotel Lodging Association of Greater Houston’s annual market forecast meeting. Strong citywide meetings and conventions activity and one-time events like the College Football Championship Game in January, coupled with this summer’s derecho and Hurricane Beryl, have led to significant growth in the market’s key performance indicators this year, the McCaslins told the audience. They expect the hotel market to end the year with average occupancy of 68%, up from 63.8% in 2023. RevPAR is forecasted to grow to $80.92 by year-end, up from $71.71 last year while ADR will rise from $112 to $119, according to the report.
While convention activity is expected to be strong again next year with more than two-dozen citywides expected, other factors such as the major weather events won’t provide the same boost to the market in 2025. That coupled with some hesitation in business and leisure travel due to high rates and economic factors will likely lead to slower growth next year.
Based on a fractional dip in demand, the McCaslin report anticipates a slight decline in annual occupancy next year to 67% while ADR and RevPAR are forecast to rise 3.4% and 2% respectively.
The full McClassin report breaks down expectations by hotel price tiers as well as regional submarkets. For more information, contact McClaslin Hotel Consulting.