U.S. hotels were preparing for a monster summer this year, but traveler demand hasn't quite reached the expected levels.

CBRE has lowered its projections for U.S. hotel performance this year, the real estate services firm said in an updated forecast released Thursday.

Revenue per available room, or RevPAR, is expected to hit $96.64 this year, a 4.6% increase over 2022, but $1.25 less than what CBRE was forecasting in May.

“An analysis of travel trends suggests that record numbers of Americans are traveling abroad this summer with a particular focus on Europe and the Caribbean. Inbound international travelers to the US are still 27% below their pre-pandemic levels, causing a temporary imbalance in demand,” CBRE Head of Hotel Research & Data Analytics Rachael Rothman said. “As long-haul flights from Asia are added back and visa delays ease, we expect to see an uptick in inbound international travel to the U.S., supporting further demand growth.”

The average daily rate is expected to go up by 3.6% in 2023, 10 basis points below the previous forecast.

CBRE is expecting a 1.6% average GDP growth and average inflation of 4.3% in this year, it said in the report. The brokerage firm had predicted a "moderate recession" in the back half of this year, and CEO Bob Sulentic said on an earnings call last month that the firm was standing by its recession projection, but pushing it back "at least one quarter later than previously thought."

Typically, the economic health of the country and hotel performance are closely linked, so the drop suggests that consumer preferences have “temporarily shifted” away from domestic travel. Airlines with a focus on the U.S., such as JetBlue, Southwest Airlines and Alaska Airlines, have all reported a surge in demand for overseas travel, which has bitten into their bottom lines.

JetBlue, for example, cut its guidance for this quarter and for the year because of weaker demand for U.S. flights, which makes up the bulk of its routes. The pandemic took a brutal toll on hotels, but demand came back after borders reopened and lockdowns around the world eased.

“At the height of the pandemic, we saw a massive loss of life … a lot of folks throughout the country, their priorities have shifted to realize just how fragile today is,” Donohoe Hospitality President Thomas Penny said on the Bisnow Reports podcast earlier this summer. “You have folks who will pay a premium to make certain they will make the most of the day.”