TORONTO — According to a new report released by CBRE in the U.S., the company expects GDP growth will slow to 0.4 per cent in 2020, down from its previous estimate of 1.9 per cent. The COVID-19 outbreak will cause a sharp drop in economic activity in Q2. As early as Q3 2020, activity will begin to stabilize and a recovery is expected to be underway by Q4. Employment is already contracting with service-sector jobs disappearing as many cities restrict social interaction. Governments throughout the world are implementing monetary and fiscal stimulus packages to try to prevent a more long-term global recession. CBRE’s current expectations are that this stimulus, as well as pent up demand, will lead to a substantial rebound in economic activity in 2021.
The lodging sector will face two headwinds: a contraction in overall economic activity and the need for social distancing, which encourages staying at home or in settings with few other humans and not traveling. This will cause a severe decline in lodging demand in the U.S., as it has in other countries. CBRE estimates RevPAR will decline 37 per cent in 2020, with a contraction of more than 60 per cent in Q2. Prior to the spread of COVID-19 into the U.S., the company had forecasted a 0.1-per-cent decline in RevPAR. the stakes are huge for the country’s economic health both now and in the future, and we had forecasted a 0.1-per-cent decline in RevPAR.