How Summer Demand Is Expected To Unfold for U.S. Hotels - CoStar

Excerpt from CoStar

As U.S. hoteliers foresee another summer of softer leisure demand, events such as concerts, youth sports and family events are driving forward bookings.

Though spring has barely begun, U.S. hoteliers are looking ahead to this summer and seeing it’s not all sunny skies.

Leisure demand kept hotels afloat through the pandemic and recovery until group and corporate travel could return. Over the last two summers, leisure travelers showed they’ve booked their revenge travel, at least on land in the U.S., and they headed out of the country.

The summer of 2024 is shaping up to look pretty similar, hoteliers said.

Resorts and outdoor destinations were a huge draw for domestic U.S. travelers during and just after the pandemic, as they crowded national parks and beach destinations, said Patrick Broderick, senior vice president of sales and revenue management for Davidson Hospitality Group’s resort division.

After a period of intense demand highs, there's an inevitable letdown, he said, calling that a "two-and-a-half-year champagne effect that is now coming back."

Where’s the Demand?

Hoteliers in the U.S. are preparing for another summer of softer leisure demand, at least relative to recent years, raising the question, "Where is the demand?"

The answer: It’s there, but it’s divided.

There’s been a pullback in demand from Florida and the general panhandle area going into southern Alabama after that region was hugely popular in recent years, said Patrick Short, president of Peachtree Group’s management division. That said, the demand in Florida markets had been inflated, so now it’s coming back to reality.

Peachtree has hotels from the West to the East Coasts, and the properties that have decent business on the books this summer are those near larger concert venues, Short said. In Atlanta, concerts are returning, so the market is seeing more demand on weekends when there are shows.

Youth sports have also been a large demand generator, he said, citing a large tournament venue outside of Kansas City that’s benefiting hotels in the area.

Urban locations generally are popular again, similar to last year, Broderick said. People are returning to these destinations to visit museums and other downtown attractions.

To make up for softer leisure demand, the Embassy Suites by Hilton St. Augustine Beach Oceanfront Resort has focused on group demand this year, General Manager Jason Kern said. While the group demand coming in is at a different rate than leisure, it’s creating a good occupancy base for the hotel. Groups are back to booking further out in the calendar, making that demand segment easier to manage.

Weddings have been big business since the property is on the beach, Kern said. There’s generally a lot of social group business, but the traditional corporate meetings and incentive trips are back as well.

At this point, it’s unclear whether this summer’s leisure travel will look like a more traditional Florida summer — characterized by drive-to visitors — or one attracting more out-of-state guests. For the last couple of years, guests have booked further out and with longer stays, but now the booking pattern shows more within the 30-day window.

With international destinations reopened and cruise lines back in business, U.S. travelers do have more options worldwide, but there's another factor holding people back: high costs.

Inflation is eating into the budgets of some would-be travelers, Broderick said. While high-income travelers are still going strong, that's not the case for everyone, especially people facing credit card debt and loan repayments at higher rates.

“Is it a surprise they’re not spending all of it on travel?” Broderick asked. “They’re just trying to get by.”

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