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Book now or pay even more later: US hotel rates surge to record high

April 26, 2022
5 min read
Book now or pay even more later: US hotel rates surge to record high
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If spring break serves as the canary in the coal mine of what to expect for the upcoming travel season, the results are clear: Prepare to pay a lot for a hotel stay in the U.S.

The U.S. continues to outperform China and Europe in terms of revenue per available room, the hotel industry’s go-to performance metric. American hotels earlier this month outperformed 2019 levels by 8% while European hotels were down 24% and Chinese hotels saw a 63% decline.

The weaker performance figures stemmed from lockdowns in Shanghai amid a surge of new coronavirus cases, while the war in Ukraine affected European hotel performance.

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Back in the U.S., the number hotel owners are likely to brag about is the one most impacting travelers: The average daily rate charged for a hotel room.

The average U.S. hotel daily room rate last month was $146.61 — the highest average daily room rate of any month on record, according to hospitality data firm STR. When adjusted for inflation, it’s only about 2% below 2019 levels.

It’s a major win for hotel owners who want to recover as quickly as possible from the decimated performance levels seen over the span of the pandemic. It’s also a reminder to book as soon as possible considering how expensive it will be to travel this summer, particularly in leisure-oriented destinations.

Average rates in Miami last month, for example, were $329.50, up from the $252.80 seen in 2019, according to STR. In Tampa, room rate averages climbed from $173.90 in 2019 to $211.35 this year.

However, spring travel demand wasn’t just from people taking a vacation.

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“Easter and spring break are just the two obvious indicators of continued pricing power for the U.S. hotel industry driven by, as we had said repeatedly before, very healthy leisure demand,” said Jan Freitag, national director of hospitality analytics for STR’s parent company CoStar. “We are now seeing some return of groups.”

Leisure travelers will find more competition for hotel rooms, as the group travel sector — those booking hotels for meetings and events — is showing signs of a revival. U.S. hotels sold a combined 6.6 million group room nights in March. That’s still short of the 7.8 million seen in March of 2019, but a sign that the recovery of yet another hotel demand driver is underway.

The lingering gap between now and 2019 demand levels for group booking activity is likely from the biggest kind of events. Large corporate events and city-wide conventions like the Consumer Electronics Show in Las Vegas still aren't taking place with pre-pandemic attendance levels. Attendance at CES earlier this year was well below 2019 levels in light of the omicron variant surge.

“We're getting closer now,” Freitag said. “That last million [group nights] that are missing is obviously the hard one [to build back].”

There is plenty to be optimistic about, as companies are still hosting smaller regional meetings and board meetings, Freitag added. Spring and summer are also peak months for weddings, which fill up hotels.

A disjointed global recovery

China and the U.S., respectively, led the world in terms of hotel recovery from the pandemic. Both countries have large populations that could prop up domestic hotels in leisure destinations even with international borders closed. The Middle East, led by Dubai in the United Arab Emirates, more recently vaulted into a recovery leadership position, as the region loosened international travel restrictions.

Even Europe, typically more reliant on international travelers to fill hotel rooms, began to accelerate in recovery toward the end of last year. European hotels even moved into second place of the “Big 3” hotel markets, as China’s strict lockdown measures in response to new outbreaks of the virus tanked hotel performance there.

Hotel executives are likely to focus on U.S. performance during the upcoming earnings season in light of the volatility of Europe and China. Publicly traded hotel companies begin to report first-quarter earnings later this week.

“The U.S. overall leads the way. Especially room rates on the higher end, leisure is just gangbusters right now, as people are certainly finding out when they're trying to book their spring break or their summer vacations or even their winter vacations. You better get going on those right now,” Patrick Scholes, managing director of lodging and leisure equity research at Truist Securities, said. “[Hotel executives will] certainly point to that, and then people will say they're very encouraged by the pace of recovery for the business traveler.”

Mid-week reports from the number of people passing through TSA security checkpoints at U.S. airports in recent weeks show the gap narrowing with pre-pandemic levels. It’s not scientific, but mid-week passenger counts typically signal how much business travel is happening.

Business travel remains the demand sector with the biggest question mark hanging over it, especially as companies are still figuring out what hybrid work-from-home schedules look like. Even a modest recovery of business travel on top of the already robust leisure and group rebound means one thing: The average hotel rate is only going to go higher.

Featured image by Crowded pool decks haven't been seen at hotels in months. (Photo by Nick Ellis/The Points Guy)
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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Apply for American Express® Gold Card
at American Express's secure site
Terms & restrictions apply. See rates & fees
Best for the well-traveled foodie
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

4XEarn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S.
4XEarn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
3XEarn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
  • Intro Offer
    Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.

    60,000 bonus points
  • Annual Fee

    $250
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    670-850
    Excellent/Good

Why We Chose It

There's a lot to love about the Amex Gold card. It's been a fan favorite during the pandemic because of its fantastic rewards rate on restaurants (that includes takeout and delivery in the U.S.!) and U.S. supermarkets. If you're hitting the skies soon, you'll also earn bonus points on travel. Paired with up to $120 in Uber Cash (for U.S. Uber rides or Uber Eats orders) and up to $120 in annual dining statement credits at eligible partners, there's no reason that the foodie shouldn't add this card to their wallet. Enrollment required.

Pros

  • 4x on dining at restaurants and U.S. supermarkets (on the first $25,000 in purchases per calendar year; then 1x)
  • 3x on flights booked directly with the airline or with Amex Travel
  • Welcome bonus of 60,000 points after spending $4,000 in the first six months

Cons

  • Weak on travel outside of flights and everyday spending bonus categories
  • Not as useful for those living outside the U.S.
  • Some may have trouble using Uber/food credits
  • Few travel perks and protections
  • Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.
  • Earn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S., and earn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
  • Earn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
  • $120 Uber Cash on Gold: Add your Gold Card to your Uber account and each month automatically get $10 in Uber Cash for Uber Eats orders or Uber rides in the U.S., totaling up to $120 per year.
  • $120 Dining Credit: Satisfy your cravings and earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, Milk Bar and select Shake Shack locations. Enrollment required.
  • Choose the color that suits your style. Gold or Rose Gold.
  • No Foreign Transaction Fees.
  • Annual Fee is $250.
  • Terms Apply.
  • See Rates & Fees