Hotels will pay historic wages and generate a record level of tax revenues this year, a recent report by the American Hotel & Lodging Association (AHLA) has revealed.
According to AHLA’s 2024 State of the Hotel Industry report, hotel owners will continue to have economic challenges, but there will be opportunities to improve technology, meetings and events and guest experiences.
Along with adopting new strategies and tools, the hotel industry is expected to invest in strengthening the hospitality workforce, attract fresh talent and prepare teams for the future of travel.
PROJECTIONS FOR 2024
- Inflationary pressures will continue to impact the hospitality industry: Although inflationary pressures have eased from their peak levels, the outlook for this year remains high and above pre-pandemic historical averages, according to AHLA Platinum Partner Avendra’s Q1 2024 Commodity Market Update. Geopolitical tensions will continue to be concerning, with potential implications for hoteliers in the U.S.
- Cleanliness and friendliness essential for positive guest experiences: According to a survey conducted on behalf of AHLA Platinum Partner Ecolab, guestroom cleanliness, property cleanliness and friendly staff were ranked as important factors.
- Demand for events that encourage meaningful human connections: Almost half of meeting planners are increasing their budgets this year, according to preliminary Q4 2023 Planner Pulse survey results from AHLA Platinum Partner Encore. Research shows that consumers are leaning towards individual, societal, organizational, and cultural impact of events.
- Transaction activity to accelerate: In 2023, hotel transactional volume in the U.S. fell to a 10-year low, pulled down by capital market dislocation arising from the Federal Reserve’s ongoing monetary tightening policies, as per an analysis by AHLA Premier Partner JLL. Despite economic concerns, fundamental performance has been accelerating as consumers prioritize spending larger amounts of their discretionary income on travel.
- Hotels to leverage technology and AI to upgrade guest experience: Organizations will focus on data security, compliance and bringing technology leaders closer to the executive level.
- Role of parking in generating more revenue and enhancing guest experience: The global parking management market is projected to touch $12.9 billion by 2032, climbing at a CAGR of 9.1% from 2023 to 2032. Technological advancements are creating seamless valet and self-parking operations while improving parking revenue, according to an analysis by AHLA Premier Partner Towne Park.
- Occupancy: This year, U.S. hotel occupancy is projected to touch 63.6%, just 3.4% less than 2019’s level of 65.8% and a considerable improvement from 2020’s record low of 43.8%. However, the 2024 projection is slightly below the 62.9% recorded in 2023.
- ADR: ADR is projected to climb to $160.16 this year, 21.8% above 2019’s ADR of $131.42 and top 2023’s level by 3%. In 2023, ADR reached $155.47 compared to the forecasted $151.26.
- RevPAR: After crossing pre-pandemic levels on a nominal basis in 2022, U.S. RevPAR continued to surge and reach. This year, RevPAR will further exceed 2023’s level by 4.1%, hitting a nominal high of $101.82.
- Guest spending: Amid inflationary and economic pressures, guest spending will touch a new high this year at $758.61 billion. This projection surpasses 2023’s record of $723.4 billion and a significant jump on a nominal basis from both 2019 ($612.86 billion) and 2020 ($342.86 billion) spending levels.
The report is based on data and analysis from Oxford Economics and was created in collaboration with AHLA Premier Partners STR, Avendra, Ecolab, Encore, JLL, Oracle, and Towne Park.