Inflation's impact on hotel revenues and expenditures

Inflation erodes consumer purchasing power and pressures hotels with tighter profit margins due to rising operational costs

During the "Inflation Abomination" presentation at the 2023 Hotel Data Conference, Claudia Alvarado Cruz, the senior analytics manager of financial performance at STR, and Aran Ryan, the director of lodging analytics at Tourism Economics, discussed how hotels have been navigating the challenges of rising expenses in relation to their revenue streams.

Key takeaways

• Whether examining data from the consumer price index or STR, the real average daily rates for hotels still remain below 2019 levels.
• Occupancy rates, in comparison to 2019, have declined, but the revenue generated is helping hotels approach levels of profitability close to recovery.
• When analyzing the breakdown of hotel revenue by comparing year-to-date data for June 2022 and 2023, it becomes evident that the share of room revenue for 2023 has slightly decreased from 70% in 2022 to 68%, signaling a reduction in the pricing leverage that hotels enjoyed in previous years.

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