Hotel prices in key American leisure destinations soar, while hoteliers in markets more reliant on business travel and long-distance international tourism are facing tougher times.
NB: This is an article from OTA Insight
It’s a case of pleasure over business for America’s hotels according to our data, as tourism-heavy locations have outperformed cities that rely more on commercial travel when it comes to pricing recovery and occupancy.
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Taking some of the top markets in the US and looking at how room rates have developed over the past year, locations such as Las Vegas and Miami are pulling ahead of more business-focused cities like San Francisco and Washington, and this looks set to continue into 2023 as well, with pent-up demand still prevailing.
The US hotel pricing picture so far
Let’s start with how pricing developed through 2022 across 10 major US cities: Boston, Chicago, Honolulu, Las Vegas, Los Angeles, Miami, New York, Orlando, San Francisco, and Washington.
Hotel room pricing recovery in select US cities across 2022
Hotel room pricing recovery in select US cities across 2022
Looking at wider trends, then it becomes clear that there is a division in the US hotel industry, with cities that are more reliant on business travel and longer-distance arrivals from Asia falling further and further behind cities that are top of mind for Americans (and to a lesser extent European visitors) when they consider their vacation locations.
We will broadly split these into more ‘commercial-focused cities’ and ‘consumer tourism focused cities’ for this analysis. Within this, the commercial cities are:
- Boston
- Chicago
- Los Angeles
- San Francisco
- Washington
And tourism hotspots are:
- Honolulu
- Las Vegas
- Miami
- New York
- Orlando
Once we put that into an ‘absolute price’ trendline for each group, as seen below, the difference is just as stark. Plotting out the average lowest actualised price each month compared to 2019 and we can see that not only do commercial cities start in a weaker position, but that their recovery is also progressing noticeably slower, with the gap widening as 2022 progresses.
Average lowest actualised hotel room price for US cities – 2019 versus 2022
We are not alone in this analysis. Bloomberg reported on a piece of research from University of Chicago Harris School of Public Policy professor Justin Marlowe and HVS Consultant Tom Hazinski that came to the same conclusions.
Their analysis, which looked at financial records and hotel surveys in 25 of the largest US cities, found that ‘commercial’ markets were underperforming, with San Francisco and Washington at the bottom for hotel revenue bounce back and tourism-heavy cities dominating the best performers, which matches our analysis of hotel room prices.
