What is the outlook for lodging in 2023?

Despite challenging capital markets, LARC anticipates 2023 U.S. Hotel EBITDA to grow by 8% and Hotel Values to increase 5%. LARC believes 2022 Hotel Values were merely 1% below 2019 levels and that both Hotel Values and Hotel EBITDA will reach 2019 levels in 2023.



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TROY, Michigan—With average U.S. hotel occupancy on track to reach 63.8 percent in 2023, just shy of the pre-pandemic level of 65.9 percent, business and leisure travelers are packing into hotels throughout North America for a second consecutive year.

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If you thought 2022 was an expensive year to travel, get ready to spend even more in 2023. New data from travel site Hopper shows that U.S. hotel prices averaged $212 per night in January — that's 54% higher than the same month in 2022. Planning on taking a trip soon?

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If you thought 2022 was an expensive year to travel, get ready to spend even more in 2023. New data from travel site Hopper shows that U.S. hotel prices averaged $212 per night in January — that's 54% higher than the same month in 2022. Planning on taking a trip soon?

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Leisure and hospitality projected to mostly recover pandemic-driven employment losses. The Bureau of Labor Statistics projects the U.S. economy to add 8.3 million jobs from 2021 to 2031. Of those, 1.9 million jobs—23.1 percent of all new jobs projected—are expected to be in leisure and hospitality.

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Average daily rate (ADR): US$153.60 (+1.8%)

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High Demand for Hotel Rooms The high demand for hotel rooms plays a big part in why hotels are so expensive right now. When lots of people want to stay in hotels, the hotels become full quickly. This is called high occupancy. With more people wanting to book rooms, hotel owners can charge more money for them.

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Future hotels will be customizable 34.4% want to use their own devices for access throughout the hotel. 25.4% said they were interested in room controls that auto-adjust temperature, lighting and even digital art, based on their preferences.

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Airbnb's disruption of the hotel industry is significant, both existentially and economically. A recent study by Dogru, Mody, and Suess (2018) found that a 1% growth in Airbnb supply across 10 key hotel markets in the U.S. between 2008 and 2017 caused hotel RevPAR to decease 0.02% across all segments.

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According to the HospitalityNet report, travel suppliers expect fuel prices to increase by 20% in 2023, which will result in higher airfare, car rental prices, and hotel rates. The high cost of electricity and fuel will impact business travel budgets, making it difficult for companies to manage their travel expenses.

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“We are going to continue to see room rates grow just below the level of inflation,” Freitag predicts—an expectation he and other experts say could continue even if the economy does enter a recession. Still, hotel rates are undeniably elevated right now.

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It turns out that booking in advance is usually the way to go if you want to save money. According to a study by TripAdvisor, the best time to book a hotel is within two months of your travel dates. This is when hotel prices are typically at their lowest.

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Hopper's analysis identifies two main factors that account for the sharp rise in hotel prices: High occupancy: As the travel industry rebounds in the aftermath of the COVID-19 pandemic, millions of people are vacationing again. Hopper is expecting high demand for hotel rooms throughout the year.

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Cheapest Day to Book Hotel Reservations Most travel agencies agree that the cheapest days to book hotels are Fridays and Saturdays. While these are the most expensive days for actually checking in and out, the best hotel rates are on the days when most people are traveling.

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Hotel prices are dynamic, fluctuating based on supply and demand — that means the price you see when you're searching for hotels one day might change the very next, even if the dates of your stay remain the same.

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