- According to a mid–year market report on hotel room rates by data intelligence platform OTA Insight, travel demand in North America is showing signs of a slowdown.
- U.S. cities dominate the list of lowest-performing destinations for room pricing in the second half of 2023.
- As European and Asian markets heat up, popular U.S. destinations, particularly in Florida, are expected to slow in growth, signaling that travel demand might be leveling off heading into 2024.
In the first half of 2023, most markets around the world experienced growth in hotel rates compared to a year ago, with North American properties now priced comfortably above 2019 levels after strong rebounds in consumer spending.
But, according to projections from OTA Insight, that rapid rate of growth might be easing, with demand potentially plateauing across the remainder of 2023.
Thirteen of the bottom 20 worst performers for room price growth from the first half to the second half of 2023 are in the U.S., which runs counter to the typical pattern of better pricing performance in the latter half of the year. Usually strong vacation destinations, particularly in Florida such as West Palm Beach, Miami, Miami Beach, Florida Keys and Tampa, are in the bottom for price growth across the year.
Despite recent investment and development activity in Florida, the reverse course could be attributed to the growing number of conventions and conferences that are refusing to hold events in Florida in response to the state’s political climate, with controversial policies involving LGBTQ rights and race prompting backlash. For example, in May, the NAACP released a travel advisory saying the state is “openly hostile” toward “African Americans, people of color and LGBTQ+ individuals.”
Plus, U.S. consumers continue to face higher interest rates, and real wages — the amount people are paid when adjusted for inflation — are falling.
According to OTA Insight, there will be 1% growth in non-adjusted room prices between the second half of 2022 and H2 2023 in North America, compared to 6% in Asia and 5% in Europe. Looking ahead to 2024, the data suggests that travel spend will moderate globally, reducing the rate at which hotels can increase prices.