Fall has traditionally been the time when hotel room rates drop. Only this year, say industry pundits, those prices are not dropping. In many cases, the per-night price of hotels is predicted to remain the same as it was during the boom of the vacation season, when pent-up demand brought in plenty of business. In some cases, it’s even inching up.
According to Yahoo! Money, Hotel prices are averaging $185 per night in the U.S, down from $199 per night in mid-June, according to Travel booking app Hopper’s pricing forecast released last week, along with its airfare outlook. But rates are expected to increase in September and October to an average of $217 per night this fall, far above the 2021 fall average of $148 per night and a reversal of seasonal norms.
“Hotels typically follow a regular seasonal pattern where nightly rates would also drop in the fall, but we're not seeing that for this year,” Andrew Heritage, senior economist at Hopper, told Yahoo Money. “We are seeing higher rates than we have typically seen in the past.”
What is driving the rates up when, in other years, they typically drop in the fall? A number of factors:
Operating Costs: We already know about the staffing shortages at hotels. That has driven up costs for a number of reasons. Without sufficient housekeeping services to wash towels and sheets, for example, many hotels are making arrangements with commercial laundry services who need to factor in not only labor but transportation.
Increases in Wages: Salaries for hotel workers have never been higher – all a part of the plan by the American Hotel and Lodging Association (AHLA) to help hotels attract and retain staff members. And it’s not just in housekeeping that there are staffing shortfalls; hotels need everyone from front desk personnel to banquet staff to salespeople to security to everyone else who keeps the hotel machine running on a day to day basis.
No Slowdown in Travel: As fall moves in, group travel (in both the sports and convention sectors) will increase. That means demands on hotels are just as high as they were in the fall.
One interesting point: During the pandemic, and just afterwards, many planners of meetings and sports events were able to negotiate room rates far lower than what hotels were able to charge leisure travelers over the summer. Expect that to have repercussions down the line as the business of planning returns to normal.
There are also headwinds to consider, and those will affect traveler choices overall. The travel site, The Points Guy, notes that people may be reconsidering their financial options:
“In the pandemic, people were stuck at home [and] they accumulated savings. Then, they went on a buying spree: revenge travel and all that,” said Edouard Schwob, an executive vice president within the asset management division at JLL Hotels & Hospitality. “It’s now back to the reality that, ‘Well, I’m being hit by [high] energy prices and being hit by all those increases in cost everywhere.’”
Higher prices and economic uncertainty inevitably will be a mitigating factor for certain types of hotels.
“There’s a little bit more sensitivity,” he added. “[People are] watching their personal spending a little bit more closely and have less discretionary spending power on non-goods and things like travel and entertainment.”