The State of the Hospitality Sector in 2023 

Reading Time: 5 minutes

The hospitality sector is a vital source of employment and economic activity across many countries worldwide. As such, it’s an essential study focus for commercial real estate investors looking to stay up-to-date with industry trends and capitalize on potential opportunities. To predict what lies ahead, let’s take a closer look at some of the expected changes that will be seen within this sector by the end of 2023.

The outside of a Florida-based hotel resort

Consumer behavior is evolving, and expectations are changing, according to a recent article on Hospitality Net. Guests want cutting-edge technology, personalized service, a unique experience, and value for money. To meet these demands, hotels must get creative in their offerings. Innovations could mean introducing new room types, amenities, or even investing in virtual reality experiences for guests.

Sustainability is becoming increasingly important – from energy efficiency to water conservation and waste management – and hotels need to consider ways to reduce their environmental impact. As more people become aware of the importance of sustainability, it will likely impact customer loyalty and purchasing decisions.

The digital revolution is transforming the hospitality industry. From online booking platforms to mobile check-in, businesses must keep up with the latest trends to remain competitive. Artificial intelligence (AI) technology is also being used increasingly, from personalized recommendations to automated guest interactions.

a hostess sets tables inside a hotel restaurant

Top 20 Cities for Hospitality Investing in 2023

The latest forecast from Hotel Management predicts that RevPAR (revenue per available room) will grow by 9.5% in the top 25 hospitality markets and by 5.8% across all US hotels compared to 2022. 

Since the pandemic’s peak, the hospitality industry has made remarkable progress in its recovery process – especially when looking at year-on-year RevPAR growth – according to the Emerging Trends in Real Estate 2023 report from PwC and the Urban Land Institute (ULI). Factors contributing to the increase in hotel demand include the return of midweek travel to pre-pandemic norms, job growth in the lodging and hospitality sector, and recovery in the top hotel markets.

ULI and PwC researchers personally interviewed 617 individuals and received survey responses from more than 1,450 people. The cities listed below are rated as the top 20 for investment in the hotel sector, ordered according to the percentage of “buy” recommendations:

  1. Nashville: 51%
  2. Miami: 46%
  3. Tampa/St. Petersburg: 41%
  4. West Palm Beach: 40%
  5. Charleston: 36%
  6. Austin: 34%
  7. Greenville, SC: 33%
  8. Washington, DC-District: 32%
  9. New York-Manhattan: 32%
  10. Orlando: 31%
  11. New York-Brooklyn: 30%
  12. San Antonio: 30%
  13. Boston: 29%
  14. Raleigh/Durham: 29%
  15. Salt Lake City: 29%
  16. Fort Lauderdale: 25%
  17. Honolulu: 23%
  18. Denver: 22%
  19. Washington, DC-Northern VA: 22%
  20. Washington, DC-MD suburbs: 22%
the outdoor pools of a resort hotel


The pandemic hit Nashville hard as it experienced one of the steepest lodging depressions of the major U.S. markets. However, Nashville had an impressive recovery, showing promise that the demand for lodging is increasing. In 2019, hotel occupancy in Nashville was 74%, while the projected forecast for 2023 is 70%, reaching 73% in 2024. 


Miami lodging experienced a recovery in 2022 with a strong demand that should carry into 2023. It is predicted that most demand will come from those traveling alone or as a group for business. Miami is the perfect combination of business and leisure, contributing to its continued lodging success.


In 2021, Tampa Bay’s tourism sector saw a significant increase in hotel revenue. Hotel revenue was more than $758 million, surpassing 2019’s record by $50 million. As of February 2022, Tampa Bay was the nation’s top destination, based on hotel occupancy.

West Palm Beach

As the pandemic cools down, the need to travel has heated up. The Breakers is a great example of high-demand hospitality; it was completely sold out for March 2022‘s spring break. Other West Palm Beach hotels cited that their current booking percentage is close to or has surpassed pre-pandemic levels.


While soaring interest rates are softening Charleston’s hotel market, strong occupancy rates keep it afloat. Estimations point toward an increase in year-end travel, which analysts expect to nudge rates and occupancy up  by December 2023. There has also been a notable push toward new hotel construction and development.


Austin hotels bring in more combined revenue today, than they did pre-Covid. A combination of higher room prices and an increase in hotels has helped to contribute to Austin’s success. Since 2019, Austin has added more than 5,000 hotel rooms and two hotels (Thompson Austin and tommie Austin).

poolside cabanas in an ocean-side resort

Analyzing Hospitality Investments in 2023: What to Seek?

If you’re considering investing in a hotel, there are several components to evaluate. These factors include the number of hotel rooms, average daily rate (ADR), and revenue per available room (RevPAR).

Total Available Rooms

Hoteliers can multiply the number of rooms by the number of days in the reported period to obtain the total available rooms. This equation provides a comprehensive look at the capacity of hotels: by subtracting out-of-order, service, and inventory rooms from the total number of available rooms.

Average Daily Rate (ADR)

Hotel ADR calculates the average price paid for each room. With ADR, the total guest room revenue for a specific time frame is calculated against the total room revenue paid and occupied hotel rooms within the same period. This calculation of room revenue/paid rooms occupied measures a hotel’s financial performance while comparing its performance to other competitors.

Revenue Per Available Room (RevPAR)

RevPAR consists of the average daily room revenue accounted for each available room. To calculate, take the total room revenue and divide it by the number of rooms available. The answer will help determine a hotel’s success at filling rooms; increased RevPAR hints at rising room or occupancy rates.

Average Occupancy Rate

Occupancy rate is the percentage of available rooms occupied for a certain period. You can calculate this rate by dividing the total paid rooms occupied by the total available rooms. Generally speaking, the higher the occupancy, the better for earning more revenue. 

a palm tree stands tall amid hotel room balconies

The Bottom Line

Overall, the hospitality sector looks set for rapid change over the next few years. Commercial real estate investors should consider these shifts as opportunities to capitalize on emerging trends and technologies. By staying ahead of the curve and adapting accordingly, investors can position themselves for future success​​​​​​​​​​​.

Discover your next hospitality investment on Crexi.

Similar Articles

Shanti Ryle
Shanti Ryle

Content Marketing Manager

Shanti leads Crexi's content marketing strategies with 7+ years of content development experience, creating everything from blog posts to award-winning podcasts. Previously, she worked on content teams at Snapchat, Weedmaps, and HopSkipDrive as well as developed copy, articles, and media for freelance publications.

Share This Article