By Doyinsola Oladipo
NEW YORK (Reuters) – Lower-income Americans dialed back their travel spending in April as reduced savings, higher credit card delinquencies and inflation weighed on household budgets, data from commercial real estate analytics firm CoStar showed.
While wealthier Americans continued to travel, lower-income travelers booked fewer hotel stays in the United States. Costar has adjusted its full-year forecast to take into account slowing GDP and reduced demand from frugal travelers.
Overall demand for U.S. hotel rooms fell 0.5% in April due to declining demand for mid-range and budget hotels, CoStar said Monday in a presentation at the NYU International Hospitality Industry Investment Conference.
“The higher cost of living is impacting lower- to middle-income households and their ability to travel, reducing demand for lower-end hotels,” STR President Amanda Hite said in a statement.
U.S. room demand fell by about 2.7% and 3.9%, respectively, in April for mid-range and budget hotels. Revenue per available room, a key metric for the sector, fell by approximately 1.7% and 3% respectively.
U.S. debt rose by $184 billion, or 1.1%, to $17.69 trillion in the first quarter, according to the Federal Reserve Bank of New York. Total borrowing levels are $3.5 trillion higher than at the end of 2019.
CoStar has lowered its previous 2024 forecasts for the sector and now expects average daily room rates to rise 2.1% this year compared to the previous forecast of 3.1%. In 2023, room rates increased by 4.3%.
Revenue per available room is expected to rise 2% in 2024, up from previous forecasts of 4.1% and following a 5% increase in 2023.
Occupancy is expected to decline year-on-year from 63% in 2023 to 62.8%, compared to previous forecasts of a slight increase. Supply is expected to grow 0.8% this year, compared to 0.3% growth in 2023.
