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

April 26, 2022
5 min read
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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.

“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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  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
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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

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3XEarn 3 Points per $1 spent at Restaurants and Supermarkets
3XEarn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
1XEarn 1 Point per $1 spent on all other purchases
  • Intro Offer
    For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

    Earn 80,000 ThankYou® points
    60,000 points
  • Annual Fee

    $95
  • 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

The Citi Premier’s 3 points per dollar spent across a wide range of popular categories is one of the more lucrative offerings in the world of points and miles. The Citi Premier comes with a $95 annual fee and is currently offering a solid sign up bonus of 80,000 points after you spend $4,000 on purchases within the first three months. It also has some valuable transfer partners to make the most of your rewards. Add in access to Citi Entertainment plus a $100 hotel credit for any single-stay hotel booking that exceeds $500 or more, excluding taxes and fees, booked through the Citi travel website, there are few reasons why the Citi Premier should not be in every traveler’s wallet.

Pros

  • Earns 3x points on restaurants, supermarkets, gas stations, air travel and hotels.
  • $100 annual hotel savings benefit (on single hotel stay bookings of $500 or more, excluding taxes and fees, booked through thankyou.com)
  • Points transfer to 16 airline programs, from JetBlue to Virgin Atlantic.
  • World Elite Mastercard benefits, extended warranty, damage and theft protection.

Cons

  • $95 annual fee
  • Lacks travel protections that other travel rewards cards come with
  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
  • No expiration and no limit to the amount of points you can earn with this card
  • No Foreign Transaction Fees on purchases