Rate hikes prompt STR, tourism economics to boost US hotel forecast

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Citing increases in average daily hotel rates in the United States spurred by leisure demand and inflationary pressure, STR and Tourism Economics raised their U.S. lodging forecast slightly, the companies said on Monday.

STR and Tourism Economics now forecast an average daily rate of $134 in 2022, up from $130 projected in November 2021. The companies also forecast occupancy of 63.8%, up from 63.4% projected two months ago , despite the subsequent onset of the omicron variant of Covid-19.

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STR in a statement suggested that the 2022 ADR on a nominal basis would exceed pre-pandemic levels, but when adjusting the figures for inflation, the full restoration of ADR and revenue per room available would not occur until after 2025. The company expects occupancy to reach 2019 levels in 2023.

The gap between the actual recovery and the nominal recovery is due to “leisure-driven” hotel rate increases, STR SVP of consulting Carter Wilson said in a statement.

“Resuming conditions are not playing out evenly across the board, and many hoteliers have had to increase rates to minimize the negative effects of labor and supply shortages,” according to Wilson. “We expect inflation to remain higher through the first half of the year with a gradual stabilization through the third and fourth quarters.”

The companies released the new projections during the Americas Lodging Investment Summit in Los Angeles, a conference held by BTN’s parent company, Northstar Travel Group.

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