- Q4 sees a boost in hotel occupancy and revenue with holiday travel and hurricane-related demand.
- Alternative lodging options such as short-term rentals and cruise lines witness a spike in demand growth, outpacing traditional hotels.
The fourth quarter of 2021 witnessed an encouraging growth in the hotel industry, fueled by the holiday travel season and hurricane-related demand. According to industry data, the overall hotel occupancy rate increased by 1.1% year-over-year in Q4, as demand growth of 2.1% outpaced supply growth of 1.0%.
The average daily rate (ADR) rose by 1.2%, contributing to a 2.3% increase in revenue per available room (RevPAR). The surge in demand, largely due to hurricane-related relocations, significantly benefited lower-priced tiers. Additionally, the condensed timeframe from Thanksgiving to Christmas, resulting in fewer group event days, endowed hotels with enhanced pricing power.
Interestingly, the demand growth for non-traditional lodging alternatives such as short-term rentals and cruise lines significantly outstripped that of conventional hotels. Compared with pre-pandemic Q4 2019, short-term rentals and cruise lines witnessed a remarkable demand growth of 31% and 14%, respectively.
However, the hotel industry experienced a slowdown in wage growth, decelerating to 3.0% in Q4 from 3.9% in Q3. The hourly hotel wage remained nearly $11 below the national average for all workers, indicating a decline in hotel job openings.
In terms of location types, most continued to lag behind their Q4 2019 occupancy rates. The two exceptions were town and interstate locations, which showed an increase of 1.3% and 1.6%, respectively, likely due to hurricane-related demand. Suburban locations were closest to their 2019 average occupancy level at 99.6%.
Brand.com continued to gain ground in the distribution channels arena at the expense of other channels, increasing its share by 3 percentage points compared with 2019. The shares of property direct, voice and group channels have all declined over the past five years, indicating a shift in consumer booking preferences.
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