Summer Ends With A Fizzle For The U.S. Hotel Market
Hoteliers hoping for an end-of-summer spark in stateside travel instead saw numbers continuing their monthslong decline.
Average revenue per available room declined 1.0% year-over-year in August, following a 1.1% year-over-year dip the previous month, according to CoStar data. Occupancy was also in the red, as the average fell to 66.1%, a 1.3% drop from July.
U.S. hoteliers are seeing the decline in travel from all sides.
Middle-market Americans are taking fewer vacations due to a shaky economy, inflation and a weakening job market. Leisure travel has slowed 30% YOY, according to an August survey.
International travelers are canceling trips due to rising tensions with the U.S., with a drop-off of 2.8% in May and 3.4% in June, according to CBRE.
The lack of middle-market travelers has hit midscale and economy hotels. Average daily rate is down by 0.8% and RevPAR has declined by nearly 2% this year for economy hotels.
As a result of the waning consumer demand, as well as labor shortages and tariffs on imports, investors and developers are becoming wary. In August, 32% of industry players reported pressing pause on new projects, and 24% have scaled them back.
Even though first-quarter performance was on par for the sector, hoteliers braced themselves for how summer performance would stack up against macroeconomic headwinds.
Q2 results were less than favorable, as Hilton, IHG, Wyndham and Choice Hotels all saw negative U.S. RevPAR numbers.
With performance on a steady decline, third-quarter earnings reports could spell a grim picture for the hospitality sector.
