The U.S. lodging industry will remain strong through the next two years, despite forecasts that revenue growth will continue to diminish, reports CBRE Hotels Research.

Occupancy levels will dip slightly, but will stay above 65.5 percent through 2021, 300 basis points greater than the long-run average. Concurrently, revenue per available room (RevPAR) is forecast to increase less than 1 percent per year during the same timeframe.

The high-occupancy, low average daily room rate environment will persist for the foreseeable future, says R. Mark Woodworth, senior managing director, CBRE Hotels Research.

The updated outlook calls for the national occupancy rate to remain at the 66.1 percent record level achieved in 2018. This marks the 10th consecutive year without a national occupancy decline.

While supply and demand appear to be balanced, room rate growth potential remains limited. CBRE now is forecasting the annual ADR for U.S. hotels in 2019 to be $131.08, just 0.9 percent over the $129.97 national average in 2018. The net result is a RevPAR increase of only 0.8 percent for the year.

“We’ve researched this ADR challenge and have not been able to identify one unique cause for the separation between high occupancy levels and slow ADR growth,” says Jack Corgel, professor of real estate at the Cornell University School of Hotel Administration and senior adviser to CBRE Hotels Research. “Instead we have found several factors that influence ADR change, and the mix of these factors differ among markets.”

CBRE determined some factors that have slowed ADR growth include, but are not limited to, growth in local market supply, low inflation, competition from the sharing economy players such as Airbnb, and the expansion of intermediaries in the sales process.

Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.