The hotel and airline industries have been a rollercoaster the last 6 months, leading to a volatile travel industry. After a 10% decrease in inflation for hotel room rates in 2020 we have seen a strong return in 2021 and 2022 is predicted to break hotel occupancy rates in locations such as Puerto Rico, St. Thomas, Florida, South Carolina, Colorado, and Georgia. Not only are occupancy rates higher than ever, but cost per hotel room night is reaching all time highs in these locations.
With that said after 18 months of minimal bookings and low occupancy (and even hotel closings of 12 months in some cases), we are finding much of the personnel in the hotels are brand new on the job. This is creating a challenging experience in terms of customer service. Plus add in short staffing in terms of house keeping and the check in process has been quite the challenging experience over the past 6 months. Set expectations that rooms are not going to be ready for early arrivals so don’t let waiting for your room ruin the first day of your vacation.
In places that service was already a challenge we are finding you really need to pack your patience. Puerto Rico, Jamaica, South Beach, be prepared to be tested and you might find yourself saying I’ve never seen anything like this.
Rates domestically are higher than ever yet service and value for your dollar is lower than ever. Despite this, occupancy rates continue to stay high for leisure travel which has caused compression in the corporate travel industry. It will be interesting to see what happens over the next 3 months as airline prices continue to soar for short term travel and airline masks mandates have been dropped.
In international destinations they haven’t seen the hotel occupancy rates return to pre-Covid demand, most likely due to required CDC testing to return to the US. If the testing requirement is dropped we are expected to see a surge in international travel occupancy rates which will lead to some lower numbers for domestic locations. Until this happens the prices of domestic travel will continue to soar.
Many companies are wanting to stay domestic due to this testing requirement so we are seeing incentive trip budgets being forced to increase 25-30% to provide a 5 star incentive experience. Plus we are seeing more short term demand than ever for incentives. Based on overall invite list and decision of employees to select trip or cash payout, we are seeing the demand for travel is there. Employees want to get together in person and they are forgiving if the experience isn’t their typical 5 star white glove trip. The key is getting employees together in a safe environment.