U.S. hotel room rates hit an all-time high this month, driven by pent-up demand among leisure travelers.
The average daily room rate, or ADR, the week of July 4 was $139.84 – 5.4% higher than the comparable week in 2019.
Analysts from hotel analytics company STR, which published the findings Thursday, said pent-up demand and higher spending travelers have allowed hotels to boost their room rates. Hotels in some regions could also be hiking rates to offset rising operational costs and staffing shortages.
STR’s senior director of consulting, Ali Hoyt, said a lack of group business travel could also be a factor.
“Most of the demand we’re seeing right now is with leisure demand, so without that group business … we don’t have those typically lower discounted group rates,” Hoyt told USA TODAY.
Most of the hotels struggling to catch up to pre-pandemic ADR can be found in major metropolitan markets like New York, San Francisco and Washington, D.C., while warm destinations like cities in Florida and Arizona have been able to hike prices to keep up with high demand.
Average daily room rates in Miami saw the biggest jump compared with 2019 prices, up 44.7% to $225.14 the week of July 4.
“We’re certainly very encouraged to see room rates climbing to this record levels during the holiday week and the summer,” Hoyt said. “It’s been a challenging year and a half in the hospitality industry in the U.S. … It’s an encouraging sign for operators who are trying to make up what they lost over the last year and a half.”
Some, like Marriott International Inc., are already appreciating the tailwinds from summer travel demand. CEO Tony Capuano told CNBC in a Wednesday interview that the company had a “smashing Fourth of July weekend,” with average daily room rates up 20% over 2019 and luxury hotel rates up nearly 35%.
STR expects average daily room rates to grow 6.3% this year. Rates will need to continue to grow to make up for lost ground after dropping 21% in 2020.
“It’ll be interesting to see how the summer shakes out and then come this fall, how does corporate travel … and less leisure (travel) play into performance,” Hoyt said. “We’re still looking at a multiyear recovery for ADR.”
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