Prices of U.S. Hotel Stays Recover to Pre-Pandemic Level

The party is over for bargain-hunting travelers.

The cost of hotel and motel accommodations in the U.S. surged 7.9% in June from a month earlier, the second-largest gain on record, the Labor Department’s consumer price index data showed Tuesday.

That marked the fourth straight monthly advance and pushed the price index back above where it was before the pandemic.

Prices of U.S. Hotel Stays Recover to Pre-Pandemic Level

The government figures jibe with industry data showing revenue per available room, which combines occupancy and prices, is finally surpassing pre-Covid levels.

So-called RevPar increased 43% in Phoenix during the week ended July 3, compared with the same period in 2019, the highest among major markets, according to data from lodging analytics firm STR. New Orleans and San Francisco notched the steepest declines.

“There’s really not much in the way of discounts for hotels, especially the ones people want to stay in,” said Lukas Hartwich, an analyst at Green Street. “There’s a lot of pent-up demand for leisure hotels.”

U.S. hotels recorded the lowest occupancy rates on record in 2020, as the pandemic kept travelers at home and ate up lodging industry profits.

Hotel occupancy was just 44% for the year, down from 66% in 2019 and the lowest on record. Occupancy rates were slightly more than 66% in June, according to preliminary data from STR.

While demand from vacationers is expected to remain strong, the hotel industry will have to wait for corporate travelers to return to the road before it sees a full recovery. That’s unlikely to happen before September.

©2021 Bloomberg L.P.

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