More than half of the rooms in budget hotels nationwide were empty in the first three months of 2024 as inflation-stricken travelers cut back on spending, according to the latest data from the hotel industry.
Occupancy rates for hotels such as Econo Lodge, Days Inn, Super 8 and SureStay were 48.7% in the first quarter, down 5% from a year earlier, according to preliminary first-quarter data from STR/CoStar, which tracks the hotel industry. did.
According to the data, a 51.3% vacancy rate led to a 6.5% year-over-year decline in revenue per available room, the largest decline among all hotel segments.
Jan Freitag, CoStar’s national director of hospitality market analysis, told the Post on Tuesday that the results were “weaker than we expected.”
Midsize hotels, the next level up from economy hotels, including chains like Best Western, saw revenue per room drop 4.5%. Prices for medium-sized and larger hotels such as La Quinta fell 2%. At the other end of the spectrum, luxury hotel sales declined by just 0.3%, while luxury hotels and luxury lodging increased by 3% and 0.4%, respectively.
“We are seeing a polarization in the U.S. lodging industry, with luxury hotels continuing to perform well due to increased corporate travel and continued healthy demand from luxury leisure travelers. [while] People at certain income levels are traveling less,” Freitag said.
According to STR/CoStar data, luxury hotel room rates are about the same as a year ago at an average of $453 per night, while economy hotel room rates have fallen 4% over the same period to an average of $70 per night. It has become.
According to data from STR/CoStart, lower-end hotels had an occupancy rate of 53% in March, compared to 71% for luxury hotels.
The research firm said the actual revenue decline in the economy sector was likely even higher, as the number of rooms declined by 2% over the past year as some hotels simply closed or converted to residential properties.
There are other signs that consumers on a tight budget are retreating.
A January survey by the American Hotel and Lodging Association found that 56% of consumers with incomes under $50,000 believe inflation will play a significant role in reducing the likelihood of them staying in a hotel over the next four months. However, only 51% of consumers with less than $50,000 answered. Those with incomes of $100,000 or more said inflation was a factor in booking hotel stays during the same period.
But some lower-priced properties are doing well, especially in Sunbelt cities where a number of infrastructure projects are stimulating demand for cheap units. Skift.
Among the cost increases from a year ago weighing heavily on consumers are car insurance (up 22.2%), car repair costs (11.6%), rent (5.7%) and housing costs, according to government data. (4.7%) and an increase in transportation costs (4.2%). .
