Hotel room prices, boosted by demand over the past year, may now hamper tourism amid rising inflation, tourism officials said.
As the travel marketing agency Visit Florida celebrated a record number of tourists for the first quarter of last week’s meeting in Orlando, staff and board members also expressed concern that rising hotel room rates are slowly affecting occupancy.
“I think we’re starting to see, especially in the last few weeks, that inflation is really starting to catch up with us in most markets,” said Jacob Puit Yancy, director of Visit Florida for consumer insights and analysis.
“At present, total room revenues are still rising in every market across the country because rising prices have been more than enough to offset declining demand,” said Puyte Yancy. However, he added: “I think we are starting to enter a period of time where this may not be able to continue to be true.
Hotel occupancy across the country has slowed as expected after Remembrance Day, according to STR, Inc., which provides data to the hotel industry.
STR did not show any of the 25 largest markets in the United States with an increase in employment between May 29 and June 4 compared to the same time in 2019, before the COVID-19 pandemic.
Employment at the national level was 63.2%, which is a decrease of 12.1% compared to the same time frame in 2019. Meanwhile, the average daily rate increased by 11.3% to 147.35 dollars compared to 2019. Even with the increase, revenue from available room decreased by 2.2%.
In the weekly STR survey, Miami published the largest average daily increase in interest rates nationwide of 37.8% from 2019 to $ 209.55.
With an employment rate of 68.9%, Orlando was closest to any national market – by 2.5% – of its pre-pandemic brand.
The numbers also come as business travel lags far behind the pre-pandemic total.
Outgoing Florida Board Chairman Danny Gaekwad, owner of MGM Hotels, said hoteliers and other companies need to make tariff adjustments.
The point is to find a balance with the daily rates that support profits.
“We made a profit when ADR [the average daily rate] and employment was both increasing, “Gaekwad said. “And now inflation and whatever other reasons, gas prices or whatever you want to say, we have to adjust tariffs or we will have lower employment.”
Last month, when Gov. Ron DeSantis announced a record 35.98 million visitors – mostly local travelers – between early January and late March, his office said Florida’s average daily rate had risen more than 38 percent over the same period in 2021. employment is growing by almost 24%.
These gains may not be equalized in the second quarter of 2022.
For every 10% that room prices rise, demand is down 6% now in Florida, Pewitt Yancey said.
Until the last few months, the total demand for rooms in the state was above the levels of 2019, and after many weeks it was above the levels of 2021, said Puyte Yancey. However, demand was not evenly distributed.
“Until about a month ago, what was happening was that the demand everywhere but Orlando was just crazy, especially Sarasota,” said Puyte Yancy.
Orlando’s lag may be due to the fact that business travel has not returned to pre-pandemic levels, said Puyte Yancey.
But in the last month, the demand for rooms in Orlando has surpassed the numbers from 2021, but the rest of the state has declined.
“Every market in the state in terms of demand for rooms is down. But now Orlando is so high compared to what it was that it maintains positive numbers across the state, “said Puyte Yancy.
Dropping out of Orlando is not just below the revival of tourism in 2021. Pewitt Yancey said it was “starting to fall below 2019 levels in about a third of Florida’s markets.”
Board member Lino Maldonado, president of BeHome 247 Technologies, said Airbnb operators, which were in high demand during the pandemic, were trying to find a balance between tariffs and employment to determine profitability.
“We are still north of the 2019 figures, but I certainly think the ADR will fall,” Maldonado said.
Jim Turner reports for the Florida News Service.