New York, NY – As summer approaches, travelers may not find significant discounts when booking hotel rooms in the United States. However, there are indications of a softening in certain segments of the market, giving potential guests some hope of securing better deals in the near future.
Hotel data firm STR recently adjusted its forecast for the remainder of the year, citing a decrease in expected average daily rate gains due to weaker-than-anticipated hotel performance across the country. Despite this trend, not all areas within the industry are experiencing the same decline in rates.
According to Amanda Hite, President of STR, there has been a noticeable divide in hotel performance in the first few months of the year. Lower-priced hotels are suffering from decreased demand as rising living costs impact the ability of lower-to-middle income households to travel. Conversely, the Upscale through Luxury tier is witnessing healthy demand, although pricing power has diminished due to shifts in travel patterns and economic conditions.
Economy-priced hotels are seeing the most significant drop in rates, with nightly prices falling by 2% in the last 28 days. In contrast, upscale and upper upscale hotels are experiencing modest rate increases, hinting at a varying landscape within the hospitality industry as the year progresses.
The revised projections for hotel rates align with recent inflation data, revealing a 1.7% decline in U.S. hotel rates compared to a year ago. This marks a stark contrast from the surge in hotel rates observed during the initial stages of the pandemic recovery, where they played a significant role in overall inflation.
While the outlook for hotel rate gains this year may not be as optimistic, STR still projects a 2.1% increase in U.S. hotel rates for this year, with a further 2% rise anticipated in 2025. These projections are in line with economists’ views on ideal inflationary figures for the U.S. economy.
Despite some softening in the luxury hotel sector, it does not necessarily translate to bargain deals for leisure travelers seeking luxury stays. The decrease in rates for luxury hotels is partly attributed to the recovery of business travel post-pandemic, leading to the return of special corporate rates that are often lower than standard rates.
In conclusion, the revival of business travel post-pandemic brings potential benefits for corporate travelers, while leisure travelers may continue to experience upward pressure on rates. As the hospitality industry adapts to changing dynamics, travelers are encouraged to stay informed of evolving rate trends to make informed decisions when planning their accommodations.