Doyinsola Oladipo
NEW YORK (Reuters) – Low-income Americans cut their travel spending in April as dwindling savings, rising credit card delinquencies and inflation weighed on household budgets, according to data from commercial real estate analytics firm CoStar.
While wealthier Americans continued to travel, lower-income travelers booked fewer hotels in the United States. Costar adjusted its full-year forecast to reflect slowing GDP and lower demand from budget travellers.
Overall U.S. hotel room demand fell 0.5% in April due to lower demand for mid-range and economy hotels, CoStar said in a presentation at New York University’s International Hospitality Investment Conference on Monday.
“Increasing costs of living are impacting low- and moderate-income households and their ability to travel, thereby reducing demand for lower-priced hotels,” Amanda Hight, president of STR, said in a statement.
U.S. room demand in April fell by about 2.7% and 3.9% at mid-range and economy hotels, respectively. Revenue per available room, an important industry metric, fell about 1.7% and 3%, respectively.
U.S. debt levels rose $184 billion, or 1.1%, in the first quarter to $17.69 trillion, according to the Federal Reserve Bank of New York. Overall borrowing levels are $3.5 trillion higher than at the end of 2019.
CoStar lowered its previous forecasts for the industry for 2024, expecting average daily room rates to rise 2.1% this year, down from its previous forecast of 3.1%. In 2023, room rates increased by 4.3%.
Revenue per available room is expected to grow 2% in 2024, up from previous forecasts of 4.1% and following a 5% increase in 2023.
Occupancy levels are expected to decline year-on-year to 62.8% from 63% in 2023, compared with previous forecasts for a slight increase. Supply is expected to grow 0.8% this year, compared with 0.3% growth in 2023.