Prices of US hotel stays recover to pre-pandemic levels

Washington

THE party is over for bargain-hunting travellers.

The cost of hotel and motel accommodations in the US surged 7.9 per cent in June from a month earlier, the second-largest gain on record, the Labor Department's consumer price index data showed Tuesday.

That marked the fourth straight monthly advance and pushed the price index back above where it was before the pandemic.

The government figures jibe with industry data showing revenue per available room, which combines occupancy and prices, is finally surpassing pre-Covid levels. Revenue per available room (RevPAR) increased 43 per cent in Phoenix during the week ended July 3, compared with the same period in 2019, the highest among major markets, showed data from lodging analytics firm STR. New Orleans and San Francisco notched the steepest declines.

"There's really not much in the way of discounts for hotels, especially the ones people want to stay in," said Lukas Hartwich, an analyst at Green Street. "There's a lot of pent-up demand for leisure hotels."

US hotels recorded the lowest occupancy rates in 2020, as the pandemic kept travellers at home and ate up lodging industry profits.

Hotel occupancy was just 44 per cent for the year, down from 66 per cent in 2019 and the lowest on record. Occupancy rates were slightly more than 66 per cent in June, showed preliminary data from STR.

While demand from holidaymakers is expected to remain strong, the hotel industry will have to wait for corporate travellers to return to the road before it sees a full recovery. That is unlikely to happen before September. BLOOMBERG