Upper-tier hotels continue to carry overall U.S. performance, and the gap between the highs and the lows is getting a little more apparent.
In the latest episode of "Tell Me More: A Hospitality Data Podcast," recorded at the Hunter Hotel Investment Conference in Atlanta, CoStar National Director of Hospitality Analytics Jan Freitag and STR Vice President of Analytics Isaac Collazo talk about that widening gap between upper-end hotels and lower-tier hotels.
“It’s almost like there’s a bifurcation in the industry; we’re seeing the higher ends do better, and at the lower end is where we’re seeing leakage in demand and lower performance overall,” Collazo said.
A sluggish economy segment is nothing new; economy demand has been down over the past 22 consecutive months. But Collazo said he’s noticing a new twist play out in the data.
“Upper-middle-class to lower-middle-class [travelers] are being priced out, not because of hotel rates, but priced out because everything in life costs more,” he said.
Credit card delinquencies are on the rise, which also supports that notion.
Collazo, a self-described optimist, admitted he was the last to jump on the bandwagon of higher prices, but does believe general inflation is hitting some people in their travel wallet.
“Yes, there are some other aspects driving economy hotels down, including closures,” he said. “But now I’m thinking that yes, people are feeling the pinch of higher inflation rates, higher interest rates and the high cost of everything overall.”
Freitag turned the conversation to luxury hotel performance, adding it continues to “fire on all cylinders.”
But he said there's some concern for the upper-midscale segment, the largest in the industry.
“I’m seeing it get hit … and it’s been down for the last five months, so there seems to be a pinch happening,” he said.
Freitag also unpacked an interesting stat about total U.S. performance in the month of February: Revenue per available room grew 2%, which Collazo said was the largest growth for the industry since November. But Freitag pointed out the “but” in that scenario.
“If you take out Las Vegas, the national RevPAR in February was down, minus 1.4%,” he said. “Las Vegas is 3% of the national hotel inventory, it’s the largest hotel market, they had a monster Super Bowl … and it had a huge impact on the national data.”
Average daily rate growth in February without Las Vegas data was only 0.8%, Collazo added.
“That, to me, is even more shocking,” he said.
More From This Episode
Other topics in the episode include:
- Freitag and Collazo’s impressions of the Hunter Hotel Investment Conference.
- Praise of Delta Airlines CEO Ed Bastian’s address to the conference.
- Performance highlights from the full month of February.
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