Hospitality National Report

Room demand is heating back up. The cumulative impact of inflation and higher interest rates has weighed on household travel budgets, cooling the hotel sector’s occupancy recovery after fiscal stimulus and pent-up demand fueled a rapid comeback post-COVID lockdowns. Those headwinds spilled into the early months of 2024, with average occupancy in the first quarter down more than 100 basis points from the same three months of 2023. Since that point, however, momentum emerged as rising business and group demand is counterbalancing a pullback in domestic leisure travel. The average occupancy rate from April to June 2024 eclipsed the equivalent 2023 span by 60 basis points. Aligning with the impact of economic pressures on travelers in the budget-friendly segment, the yearlong average occupancy rate at limited-service hotels fell by 140 basis points through mid-2024. Conversely, the tailwinds of business, group and higher-income leisure travel pushed the full-service rate up by 100 basis points in that span.