Resilient. That’s the word Marcus & Millichap uses when describing the U.S. hospitality industry. This comes at a time in which leisure travel continues to boom across the country and the number of hotel rooms booked during the last 12 months is on the rise.
The big headwind? Business travel. As Marcus & Millichap reports in a May research briefs, business travel still hasn’t bounced back to anywhere near pre-COVID levels.
During the 12-month period that ended this April, the number of hotel rooms booked rose to within 2% of the all-time high set in February of 2022. This strong demand has boosted both the average daily room rate (ADR) and revenue per available room (RevPAR) of hotels across the United States.
According to Marcus & Millichap’s research, the ADR of U.S. hotels hit a record high of $152.67 during the 12-month period ending in April. During the same period, U.S. hotels’ RevPAR climbed to $96.69, also a record-setting number.
These numbers should remain strong as Marcus & Millichap forecasts a busy summer travel season. This is partly because so many U.S. residents are working: Unemployment in the United States stood at 3.4% in April, the lowest this rate has been in more than 23 years. This strong labor market has resulted in U.S. residents who feel financially strong enough to take more trips.
Consider the numbers for Memorial Day this year: Marcus & Millichap says that an estimated 42.1 million U.S. residents traveled 50 miles or more from their homes during the holiday weekend. That’s a jump of 7% from the previous year. Marcus & Millichap says that air passenger volume during this summer is expected to surpass pre-pandemic levels, with hotels in areas such as Nasvhille, Austin and Las Vegas poised to benefit the most from this travel boom.
At the same time, travelers from overseas locations are again taking trips in the United States. Marcus & Millichap’s report says that nearly 63 million international travelers will vist the United States in 2023, a jump of 21% from last year.
On the negative side? The hospitality industry still hasn’t fully recovered the jobs it lost during the COVID pandemic. As Marcus & Millichap reports, accommodation employment in the United States was still 252,000 positions lower in April than it was during the pre-pandemic peak. The lack of labor could cap occupancy rates and reduce the level of services guests receive in some hospitality properties.