"Normalization" is the word of the day for hotel industry performance in the second quarter of 2023.
In the inaugural episode of "Tell Me More: A Hospitality Data Podcast" from the Hotel News Now Podcast Network, STR's Isaac Collazo and CoStar's Jan Freitag chat with Hotel News Now's Stephanie Ricca about how U.S. hotels are approaching more normal performance and demand cadences after the extreme downs and ups of the past few years.
"We've hit upon that whole idea of normalization by looking at day-of-week patterns," said Collazo, STR's vice president of analytics. "We knew that weekends and shoulder days were really popping last year and the year before that. And so when you look at the data now and compare it to the same calendar year as 2023, which is 2017, 2006 and 1995, you'll see that everything is coming back to what is a normal level for a shoulder day, what is a normal level for a weekday and a weekend."
Freitag, CoStar's national director of hospitality analytics, added that demand is achieving more balance as it normalizes. The outsize demand for leisure is settling down, while the undersized demand for urban hotels is growing.
"Resorts had arguably over-indexed and are now coming back to a more normal level, and urban hotels are still lacking corporate transient demand," Freitag said. "That's coming back more slowly, and that means that there is more fuel in the tank for urban room rates."
Click below to listen to the podcast.
Here's some of what you'll hear in this fast-paced, off-the-cuff conversation:
- Where is demand now? "All of the demand growth in the second quarter was in the top 25, and all other markets actually lost demand," Collazo said. That underpins the steady return of business-transient and corporate travel.
- What about leisure? It's still strong, Freitag and Collazo said, but in recent months it's shifted out of the U.S. as travelers take long-anticipated vacations abroad.
- Will there or won't there be a recession? Freitag and Collazo unpack the way they approach the question of, "how do we know whether performance is normalizing or we're seeing the effects of inflation and a looming recession?" It's about looking at demand from similar calendar years in the past by chain scale and by location, Collazo said, and the data does support normalization.
- Shoulder shifts: Freitag talked about the way return-to-office policies — which increasingly are allowing more work-from-home Fridays — are clearly altering trends in shoulder nights at hotels. "Sunday is going to go back to normal because people are not going to take Monday off, but I think they're going to be able to travel on Thursday," he said. "Thursday night, therefore, is going to continue to stay over-indexed."
- Transaction trends: Freitag and Collazo add their opinions to the mix on how interest rates are having an impact on transaction trends, particularly in light of the news of Park Hotels & Resorts and Ashford Hospitality Trust handing back keys to hotels.
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Tell Me More: A Hospitality Data Podcast from the Hotel News Now Podcast Network is available to download on Apple or Spotify, where you can also subscribe to future podcast content.