Travelers (myself included) winced over the past 18 months as hotels and airlines higher and higher regulation rate amid the growing demand for holidays following the coronavirus pandemic.
However, travel costs seem to be stabilizing.
Hotel prices are up just 8% from a year ago, according to the latest consumer price index released Wednesday.
That still seems like a huge leap, but let’s look at it: Hotel prices at one point in late 2021 were up nearly 26% year over year and were the leading cause of inflation in the US. leap. This comes after hotel companies advised owners to maintain higher rates during the worst months of the pandemic. Discounts will discourage people from traveling amid government-ordered lockdowns.
While hotel price growth may be slowing, don’t expect hoteliers to reverse course and start cutting prices — even in these uncertain economic times.
“Two things could be true: Rates will be off, but that doesn’t mean room rates are falling,” said Jan Freitag, country manager for hotel market analysis at CoStar. “It’s just that the growth rate is decelerating. We are not saying interest rates are falling.”
People may have been over-saving during the pandemic, but travel agencies are certainly doing their best to squeeze more money out of many people’s wallets.
Hotel companies maintain higher rates during the worst of the pandemic, meaning they can recover much faster. Anyone who has been to South Florida and paid $800 more than usual for a hotel night knows this all too well.
With all the uncertainty in the economy and the prediction that the US will slip into a recession by the end of the year, there is much talk about how far hotel companies can play this pricing power game. long. If excess savings were to be cut and financial conditions would have worsened, lower interest rates would surely be needed to create demand, wouldn’t it?
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Unnecessary.
“What hoteliers are seeing is that the cost of running their property continues to rise, labor costs continue to rise, and we are still having a hard time hiring all the workers,” said Freitag. job. “So now hoteliers are asking themselves, ‘Hey, wouldn’t it be better if I charge more but then provide better service to the people I receive through the door? My employees are not so stressed, [and] I can provide the service they expect when they pay this higher price.’”
CEOs of Marriott And Hilton Hotel Both said earlier this year that they do not expect room rates to fall in 2023, as both group and business travel resurgence along with international travel demand.
Having an element of worker competency also prompted the decision to focus more on rates rather than occupancy. While hotels are generally doing better now than they were before the pandemic, overall hospitality employment is still around 2% below 2019 figures — and there has been a labor crisis before the global health crisis.
Of course, the profit part of the equation is also a very important factor.
“As an industry, we have traditionally tried to maximize occupancy, but I think after 2020 and 2021, we realize that, in terms of profitability, we have a lot of money,” says Freitag. can increase occupancy better,” said Freitag.
Your next vacation will likely still be expensive, but at least it won’t be susceptible to the cost spikes we saw just a year ago.
