U.S. Hotel Rates Buck Inflation Trend With Year-End Decline

Marwa Grimes

Skift Take

Good news for travelers, bad news for hotel owners. The U.S. hotel industry is seeing a (modest) decline in room rates after a recent dramatic run-up in prices.

Rising hotel room rates in the U.S. have stopped contributing to broader inflation. Hotel prices declined in December by 0.5% year-over-year.

According to U.S. inflation data released on Thursday, hotel rates rose 0.4% month-over-month in December.

The cooling in hotel prices contrasts with broader inflation that hasn’t been tamed yet. Overall, U.S. consumer price inflation was up 3.4% year-over-year in December.

Recent hotel pricing has suggested that the post-pandemic boom in travel demand — which generated double-digit rate spikes a year ago — has been sputtering out. Reasons include a moderation in demand for rooms. It is too early to tell if hotels saw labor cost pressures ease in some markets.

Hotel rates as a national average dropped 3% between September and October and by 1% between October and November. (The U.S. Bureau of Labor Statistics adjusted the numbers to reduce the impact of seasonal patterns such as weather, holidays, and school schedules.)

Other data sources see a slightly different picture.

Preliminary numbers for December show U.S. hotel rates up 2.2% year-over-year, according to STR, the gold standard for hotel performance benchmarking. The pace has been cooling since November when rates were up 3.6% year-over-year.

“It speaks to a step-down in the growth rate but that there’s still growth,” said Jan Freitag, national director of hospitality analytics at CoStar Group. “From a longer perspective of comparing late last year with pre-pandemic, and looking in inflation-adjusted terms, rates are roughly flat in real dollars.”

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