Hotel demand across the board has been falling short of expectations in 2023, according to hoteliers, but they are hoping that a rise in business and group travel will help soften the landing of lower demand during the shoulder months.
Some hoteliers are leaning on maintaining rates while competitors choose a more aggressive pricing strategy. Others are focused on generating an optimal mix of business.
“It’s important to continue to be agile in strategy and generating a good mix of business as we have seen the impact of increased flexibility in group rates leading to increased occupancy and while leisure travel has been broadened by the re-opening of major markets, guests are still likely to visit to locations that have been on their radar either traditionally or are still willing to try new places,” said Larry Crosby, general manager of The Foundry Hotel.
Leaders in the industry shared how they are preparing for the fall months.
Erica Lipscomb, Senior Vice President of Revenue Strategy, Crescent Hotels & Resorts
“I am moderately optimistic for the remainder of 2023. Leisure demand is softening in destination and resort locations as international travel rebounds; however, group pace remains strong with continued growth in ADR across the portfolio and we are seeing steady growth in urban markets.
“Leisure demand will normalize to historical seasonal patterns. The impact in the fall will be unique and market specific as group demand continues to rebound along with business travel.
“Business and group travel will offset leisure demand as segments normalize. We continue to monitor the potential impact of the volatile economic environment on companies’ travel budgets.”
Patrick Broderick, Vice President of Sales and Revenue Management, Davidson Resorts
“Demand has definitely fallen short of expectations in 2023 for every month so far since March. For destinations and resorts, there has been downward pressure on ADR as a result, especially in top destinations such as Orlando and Miami.
“[There’s] no real optimism for an improvement in 2023 as RevPAR growth has plateaued, and the transient segment is slowing overall with a return to traditional seasonality. Group has been the only savior and some signs of life with business travel in suburban and urban locations. In the U.S., we have the most open and competitive travel landscape since pre-pandemic. [However] international travel continues to go outbound to countries previously off limits [and] cruise lines [are] fully operational, [causing] continued softening in leisure demand for fall 2023.”
Anton Moore, General Manager, Gansevoort Meatpacking
“I am absolutely optimistic for this fall. Within the New York market, the demand is definitely there. The competitive landscape with the increased amount of inventory has impacted the ADR overall. New York City has seen an increase in new hotel openings this year, which impacted our ADR growth in 2022. I’m optimistic that our corporate group will be strong in the fall, supported by high-end leisure travel during the weekends.”
Larry Crosby, General Manager, The Foundry Hotel
“Despite the Asheville [North Carolina] market seeing a slight decrease in demand by around 2% during the summer, I remain cautiously optimistic that the shoulder season will see this level off and maintain some stability in ADR. The shoulder season in Asheville is generally around the tail end of the summer, and although the market has seen a decrease in leisure demand, group business has increased providing a great mix of business to offset this trend.
“Summer generally represents one of two peak seasons in Asheville — the other being the fall, in which this peak period has seen both ADR and demand trend lower than 2022 and 2021 but [more than] 2019, which is now serving as a true benchmark year. Pandemic travel certainly had an incredible impact on overall demand, leisure travel in particular, and that has normalized with the gradual reopening of major markets, thus creating more supply and ultimately driving rates down across markets. There are outliers depending on the segment and location as our property has been able to hold rate steady during this period, although our market has been seeing a downward trend for ADR [over] the course of 2023.
“Ultimately, I would consider the demand and average daily rate for the remainder of 2023 to remain flat to 2022, and in some segments, fall slightly because of the continued normalization of markets. It’s important to continue to be agile in strategy and generating a good mix of business as we have seen the impact of increased flexibility in group rates leading to increased occupancy and while leisure travel has been broadened by the re-opening of major markets, guests are still likely to visit to locations that have been on their radar either traditionally or are still willing to try new places.”
Antonio Villarroel, Director of Sales and Marketing, The Westin Lima Hotel and Convention Center
“We have a positive view for the next semester, based on the improvement in the country's political situation compared to the first semester. The demand in the first semester has recovered by 70%, compared to pre-pandemic figures, so we still have room to continue with the recovery.
“It is also optimistic since the plan is to maintain our rates, despite the competitive set being very aggressive in terms of pricing.
“We believe that the transition from the high season of leisure demand during the U.S. summer to the inevitable decline in demand this fall will have a similar impact as it did in the past, especially in our hotels in Cusco [Peru].
“We are projecting a rise in leisure demand for the second semester. In fact, we anticipate an increase in both segments, leisure and groups. Please note that July and October are the months with the highest demand this year for the groups segment.”
Atit Jariwala, CEO, Bridgeton, owner of Walker Hotels and Dawn Ranch, and operator of Marram Montauk
“We remain optimistic about the remainder of 2023. It’s been a great couple years with leisure demand up significantly. Revenge travel has indeed been robust. That said, we do think that some travelers may choose to slow down a bit, but also believe there will be others that may fill that gap, from other areas of the country and around the globe. International travel has not yet recovered, and we believe this fall we’ll see more international arrivals as well as more corporate travel.
“In particular, the amount of group inquiries received from investment, tech, advertising and education is up 25% from the same time last year and has provided the base to offset the expected drop in leisure this 2023 compared to our actuals in 2022. With this said, our optimism remains positive regarding ADR for shoulder seasons this fall with groups and corp travelers choosing alternative (shoulder) dates to avoid the compression of Fashion Week, UNGA, ComicCon, etc.”
Bixente Pery, General Manager, Four Seasons Resort Rancho Encantado Santa Fe
“Going into the fall and based on what we are currently seeing, the leisure demand will continue to be better than last year. Even though the demand is there and improving, we still are not seeing the same average daily rate levels that we saw pre-pandemic.
“The increase in group travel certainly offsets the potential risk of leisure travel reductions. For us at Four Seasons Resort Santa Fe, we’re seeing so much demand for group bookings for the remainder of the year, which is great, but it is also somewhat limiting our ability to take advantage of periods with solid leisure demand.”
Sergio MacLean, Principal Owner, Mac&Lo Hospitality, which operates the Shinola Hotel
“As we look ahead to the remainder of 2023, we are feeling optimistic about our prospects at Shinola Hotel. While we may experience a slight slowdown during the late summer months as travel to classic vacation destinations returns, we're excited about the prospect of a revenue boost. Thanks to a return to normal compression ratios in the fall, we're confident that growth will pick up again from September to December in urban destinations, including Detroit. Our commitment to delivering the best possible service to our customers means we're ready to seize the opportunities that lie ahead."
Justin Arest, Owner, Kixby Hotel
“For the remainder of 2023, my optimism remains steady. While forecasting today presents unparalleled challenges, apparent declines in travel-related optimism might simply reflect a recalibration for some from prior overly hopeful projections. Current trends for NYC are promising with subway ridership surpassing 70% of pre-pandemic levels and the trajectory for office returns continuing upwards. Moreover, it is still anticipated that total travelers to NYC will exceed pre-pandemic figures sometime next year. While we must remain vigilant against both familiar and unforeseen challenges, one should never underestimate the resilience and allure of New York City.”
