High hotel rates are the new normal – and they haven’t yet peaked, according to several hospitality CEOs, Business Travel News recently reported.
Rebounding demand following the pandemic has driven hotel rates to new highs, but many leaders in the hospitality industry think rates could still climb higher.
Leisure demand has been the biggest post-pandemic driver, as people clamber to travel due to pent-up demand. Corporate travel is still recovering, but could soon comprise a bigger piece of the pie, BTN reported.
With corporate demand on the rise and an increase in blended leisure and business volume, hotel companies can essentially name their price.
Over the past two years, rates have generally risen, and some firms forecast increases in the near term, though with some moderation. STR upped its forecasts for 2023 revenue per available room by 3.5% and the average daily rate by nearly 5% over 2022, which itself was a record-breaking year.
Hospitality industry leaders seem to agree there’s still room for rates to climb higher. Hotel companies see current rates as a reflection of the industry’s current supply and growth.
According to STR and other reports, hotel occupancy levels have not yet recovered to pre-pandemic figures, but rate hikes more than make up for it and “have created a quality-over-quantity pricing environment,” BTN reported.
Read the full Business Travel News Article here.