Prices at budget hotels are falling, but that doesn’t mean there are many bargains to be had

Travelers this summer may not be able to enjoy any big discounts on hotel bookings in the US, but some market segments are seeing a decline.

However, it’s still a bit early to celebrate the idea of ​​any bargains to come.

Hotel data company STR This month adjusted its forecast for the rest of this year to lower the expected average daily rate increase due to weaker-than-expected U.S. hotel business activity so far this year. now. But reduced hotel prices are not found everywhere.

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“We have seen hotel operations stagnate in the first four months of the year, and we do not believe this will ease any time soon,” Amanda Hite, STR president, said in a statement. . “The rising cost of living is affecting low- to moderate-income households and their mobility, thereby reducing demand for hotels at lower price points. Floors range from Luxury to The high-end is seeing steady demand, but pricing power has weakened due to changes in travel and mix patterns and to a lesser extent, economic conditions remain the top priority for most. all Americans, but volumes have declined as prices of goods and services continue to rise.”

Budget hotels are seeing the biggest discounts in the industry, with nightly rates down 2% across the market segment over the past 28 days. In comparison, upscale hotels (brands like Aloft and DoubleTree) and upscale hotels (brands like Westin and Hyatt Regency) saw prices increase by 1.9% and 2.6%, respectively, over the same time frame .

The potential downward revision in hotel prices complements inflation data this week, which showed US hotel prices fell 1.7% from a year ago – a major reversal from the recovery after the coronavirus pandemic when Rising hotel prices are the leading cause of general inflation.

Keep in mind that while STR isn’t optimistic about hotel price increases this year, the company still predicts US hotel prices will rise 2.1% this year and another 2% in 2025 – roughly the same the level that economists consider ideal inflation. data of the US economy.

Furthermore, even a slight slowdown in the luxury hotel sector doesn’t necessarily mean that casual leisure travelers will get a bargain when checking into the Four Seasons or St. Regis. But here’s a half-hearted view: Part of the reason prices are falling at luxury hotels is because business travel is finally recovering from the pandemic. This means re-introducing the company’s special rates, which are negotiated and lower than the average daily rate applied to most travelers.

Of course, that doesn’t necessarily help the average traveler who wants to enjoy a stay at a high-end hotel without breaking the bank.

“The [average daily rate] “Our prices will continue to increase,” said Jan Freitag, national director of hotel analytics at STR’s parent company, CoStar. It’s just, the way the data is reported to us, the mix is ​​different because we have more transient companies out there.”

Yay for business travel to finally return post-pandemic. Not good for our wallets…unless you’re looking for a more budget-friendly brand.

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