Summer Hotel Demand In Cape Cod Cools As Travelers Cut Spending

The hotel sector in Cape Cod, one of New England's top summer tourist destinations, saw occupancy fall last year below pre-Covid levels, and economic uncertainty threatens to continue that slowdown this year. 

Though the region will surely draw crowds of tourists looking to escape the city for the beaches this summer, Cape Cod hotels are recording more last-minute bookings and shorter stays as domestic travelers tighten their budgets. And they are seeing falling demand from international travelers hesitant to visit the U.S. 

Cape Cod hotels during the peak tourism months of July and August last year recorded average occupancy of 69.7% and 71.3%, respectively, according to STR data released by the Cape Cod Chamber of Commerce. Those months were down from the prior three years, and they were below the pre-Covid levels of 75.9% and 78.3% in 2019. 

Hotel managers and economic development officials tell Bisnow the region is still on track for solid activity in both the traditional hotel and short-term rental markets this summer, but they aren't expecting to return to the levels of the red-hot summers of 2021 through 2023.

"Booking windows are getting shorter, the length of stays a little bit shorter, and that seems to be a function of general economic uncertainty," Cape Cod Chamber of Commerce CEO Paul Niedzwiecki said. "A lot of the Cape Cod economy is really built around drive-to vacations for middle-class families. We are starting to see a slight decrease in the bookings."

Nationally, hotel demand is expected to drop this year, with larger chains cutting revenue projections, citing economic uncertainty and weakening travel spending. 

International travel is also set to see a decrease this year as political and economic uncertainty draw travelers to other countries. In March, there was an 11.6% year-over-year dip in international travel, according to CBRE. 

Across the country, there has been a wave of trip cancellations from Canada due to the tariffs and political attacks from the Trump administration.

The Cape has thrived on Canadian travelers driving over the border from cities like Montreal, but Niedzwiecki said that this year is different.

"We've definitely heard from some Canadians through emails and messages, and they're very polite, but they're very direct," Niedzwiecki said. "They're not going to come this year, so we expect to see a little bit of a dip on that."

Tashula Beamish, general manager of the 128-room Bayside Resort Hotel in West Yarmouth, said international travel to the hotel has been noticeably down from past years.

"We're hoping to get more regional travel, because obviously, when you lose all that international travel, you hope something will pick it up," Beamish said. "It's not as bad as more inner city places because we're just surrounded by beach and it's summer."

Cape Cod hotels benefited from strong demand in the first few years after the onset of the pandemic. 

Direct domestic tourism spending in Barnstable County, which includes all of Cape Cod, reached $1.4B in 2022, an increase of 2.9% from 2021, according to the Cape Cod Chamber of Commerce.

In the peak year of 2023, the Cape received $2.7B in overall visitor spending that supported 14,000 tourism jobs, Niedzwiecki said. 

Investor appetite for Cape Cod hotels increased during those years, with hundreds of millions of dollars pouring into the market, Niedzwiecki said.

In January 2024, the New England region welcomed its first Margaritaville Resort in Cape Cod, replacing the Cape Codder Resort and Spa in Hyannis. The 272-room hotel was acquired by Plymouth-based hotel investor Linchris Hotel Corp. in late 2022 for $47M, according to public records.

"They put a lot of money into Margaritaville, and it's a different kind of marketing plan," said Niedzwiecki. "We see people coming to that destination that maybe wouldn't have come to the Cape before, but they're coming to the Margaritaville experience."

The Bayside Resort Hotel was acquired by Bayside Yarmouth LLC in 2023 for $10.7M, according to public records. 

Beamish said that this year, more of the hotel's bookings have been within two weeks of the stay and are booked for shorter periods — two days on average. Beamish said that June was slower than expected at the hotel, but it is starting to gain some steam for July bookings.

"A lot more last-minute rather than further out bookings," Beamish said. "As we're coming up on those time periods, we're getting a bunch of bookings for the weekends."

Cape Cod also has a large market for short-term home rentals, with the 18,000 available in 2024 marking a 12% increase from April 2023 and almost three times as many as Boston, the Boston Globe reported.

In the first few years after the pandemic, those rentals would often book up for July and August several months beforehand. But as of April, there was still plenty of availability as demand was slower, the Boston Globe reported. The slowdown is primarily due to the political and financial uncertainty that has left many people booking at the last minute and spending less time at resorts.

 "The summers of '21, '22 and '23 were sort of record-breaking summers for the Cape, and that's because the Cape Cod economy is more of a second-home economy," he said. "That's a big component of the season that we look at."

Niedzwiecki said some positive factors could help boost demand this year, including new direct flights to Hyannis from historically untapped markets. Last week, American Airlines announced it was extending its flights to the Cape to include Chicago and Philadelphia.

"Places like Chicago aren't traditional sort of feeding areas for visitors to the Cape, but we're starting to see some of those new markets open up," he said. "With the increased service directly into Hyannis, we're starting to see more people fly."