More than half of the country's budget hotel rooms were vacant in the first three months of 2024 as inflation-hit travelers cut spending, according to the latest hotel industry data.
Hotels like Econo Lodge, Days Inn, Super 8 and SureStay posted occupancy rates of 48.7% in the first quarter, down 5% from last year, according to preliminary first quarter data from STR/CoStar, which tracks the hotel industry.
The 51.3% vacancy rate led to a 6.5% drop in revenue per available room compared to the same period last year, the largest decline among all hotel segments, the data showed.
The results are “weaker than we thought,” Jan Freitag, national director of hotel market analysis at CoStar, told the Post on Tuesday.
Midscale hotels, the upper tier relative to the economy that includes chains like Best Western, saw revenue per room fall 4.5%. Upper midscale hotels, like La Quinta, were down 2%. At the other end of the spectrum, luxury hotels only suffered a 0.3% revenue decline, while upscale and upscale hotels grew 3% and 0.4%, respectively. .
“We are seeing a bifurcation in the U.S. lodging industry, where upscale hotels continue to perform well thanks to increased business travel and continued healthy demand from business travelers. “High-end amenity, (while) people with a specific income level travel less,” Freitag said.
Room rates at luxury hotels are essentially flat compared to last year, at $453 per night on average, while rates at economy properties are down 4% over the same period to an average of $70 per night, according to STR/CoStar data.
In March, occupancy at low-end hotels was 53%, compared to 71% in the luxury market, according to STR/CoStart data.
The actual revenue decline in the economic sector is likely larger as the number of rooms declined by 2%, as some hotels simply closed their doors or were converted to residential properties over the past year, according to the firm of studies.
There are other signs that consumers on tight budgets are opting out.
In January, an American Hotel & Lodging Association survey found that 56 percent of consumers earning less than $50,000 said inflation would play a significant role in reducing their chances of staying in a hotel over the next four years. coming months, while only 51% of consumers earning $100,000 or more said inflation was a factor in booking a hotel stay during the same period.
But some inexpensive properties are doing well, particularly in Sun Belt cities where a number of infrastructure projects are fueling demand for cheap rooms, according to a report from Skift.
Increased costs from last year weighing on consumers include car insurance (up 22.2%), car repairs (11.6%), rent (5.7%) , housing (4.7%) and transport up (4.2%), according to government data. .