The question of whether rising interest rates will push the United States into a recession continues to be the topic of daily economic debate. However, executives from major hotel conglomerates do not appear to share these fears. Despite acknowledging the potential concerns, they believe the hotel sector could avoid a downturn due to revenge spending patterns and the recovery of the business, group and international travel sectors.
The pre-pandemic shift in spending from material goods to experiences continues and extends across all generations. After losing a couple of years of life experiences, people are embracing a “live for now” attitude and prioritizing experiences over materialistic items, even if it means paying a premium. So far, in 2023, the average national rate per available hotel room is up 6 percent.
Thousands of Americans are flocking to Europe for their summer destination vacations where hotel rates overseas are surging to record highs. This is especially true in premier destination cities, including Paris, London and Berlin, where rates are up 50 percent, 30 percent and 15 percent, respectively. Luxury hotel bookings are also experiencing this surge, driving the demand for more luxury development.
Domestic hotel executives are particularly bullish about business travel, which is experiencing a resurgence as companies return to in-person meetings and conferences, driving the demand for business accommodations. Recovery in the business sector is a significant tailwind for the hotel industry’s overall growth.
The summer of 2023 could set a precedent for remarkable hotel growth opportunities in the near future. There are plenty of hotel developers sidelined and waiting for an opportune time to strike. Given the improved hotel demand, this powder keg could blow if inflation begins to ease in the latter half of 2023.
- Sperance, C. (2023, June 19). Hotel CEOs on Summer Rates, Recession Risks and How AI Can Affect Future Travel. Retrieved June 30, 2023, from www.thepointsguy.com
- Penny, T. and Costello, J. (2023, May 22). Hotels Planning for Another Bumper Summer of Revenge Travel. Retrieved June 30, 2023, from www.bisnow.com
