With the FIFA World Cup just a couple of weeks away, anticipation is brewing about what sort of lift the event will bring to U.S. hotels and what hoteliers should do to prepare.
Early outlooks — going back as far as last June — projected hotels to experience a “modest” lift from the event, which runs June 11 to July 19. Across North America, 16 cities plan to host a total of 104 matches, with the final match taking place at MetLife Stadium in New Jersey, just outside of New York City.
A May report from the American Hotel & Lodging Association found that U.S. hotel bookings for the World Cup are “tracking below initial forecasts,” potentially challenging hotel performance. The report also highlighted ongoing geopolitical issues and visa barriers, which could put a damper on international demand.
Following FIFA’s cancellation of thousands of hotel rooms in all U.S. host cities in March, some hoteliers started categorizing the World Cup as a “non-event,” Fortune reported. This move also “amplified booking uncertainty,” and hoteliers have since been working to backfill these rooms and adjust sales strategies, according to the AHLA report.
Despite recent data, hoteliers in and around host cities still anticipate receiving some sort of boost from the event and are exploring different revenue-generating strategies.
As the World Cup draws close, Hotel Dive spoke to hoteliers and industry leaders about the event’s anticipated impact, the outlook on international travel demand and how hotels in and around host markets can benefit.
Optimistic but cautious forecast
When asked about how hotels will fare during the World Cup, AHLA President and CEO Rosanna Maietta told Hotel Dive, “We’re holding our breath,” adding that while “the games themselves will be successful, whether all of that flows into the community at large” remains to be seen.
“I think a hotel stay is always a unique stay, but in an environment surrounded by the global allure of soccer, it’s especially special.”
Rosanna Maietta
President & CEO of American Hotel & Lodging Association
According to a February CoStar report, the event is expected to increase U.S. RevPAR by 1.7% year over year in June and July — a “negligible” domestic impact. Host markets have more to gain from the event, with those cities set to experience year-over-year RevPAR growth of 12.7%.
But better performance indicators likely won’t come to light until early June, Didio Pequeno, director of hospitality market analytics at CoStar, told Hotel Dive.
Pequeno said CoStar is now forecasting a “sizable gain” in RevPAR for host cities of nearly 13% year over year, noting this lift will be driven largely by higher ADR rather than a surge in occupancy.
Maietta remains optimistic that the event will draw large crowds due to soccer’s international appeal, spurring a last-minute boost in demand.
“I think a hotel stay is always a unique stay, but in an environment surrounded by the global allure of soccer, it’s especially special,” she said.
An estimated 1.24 million international visitors are expected to travel to the U.S. for the tournament, per Tourism Economics. But because of the number of visitors — and the correspondingly high room rates — domestic travelers may be deterred from visiting host cities, Pequeno explained.
“Most Americans that would have gone to a city, specifically if it's a host city this year, they're probably going to avoid it because the prices are going to be incredibly high,” Pequeno said.
Alternatively, if international visitation ends up lower than expected, hotels will likely drop rates, which could attract more domestic tourists, he said, noting demand surrounding the event is still largely a toss-up.
International travel concerns
If there are fewer international travelers than anticipated, it would have an economic impact, as international World Cup travelers are expected to spend 1.7 times as much as typical international visitors, per the U.S. Travel Association.
Visa barriers and broader geopolitical concerns are among the factors impacting international demand, according to the AHLA report.
“Even with global anticipation building, the path to the U.S. for many World Cup travelers feels increasingly less like a red-carpet welcome,” the report states. “International perceptions about affordability and policy unpredictability further dampen enthusiasm.”
According to Pequeno, some international travelers are concerned that their social media presence could be reviewed upon arrival in the U.S. “There's just a lot of misinformation that hopefully will start to dissipate as people start to arrive and they start to see that that's not the case,” he said.
Additionally, rising costs, including for airfare and gas, make the U.S. an expensive destination and present another barrier for travelers, per AHLA. According to Jonathan Gough at commercial intelligence platform Lighthouse, the three most expensive host cities this summer are Vancouver, New York and Boston.
While the World Cup has the potential to be a “welcome boost” for the industry, “it is not a silver bullet for the broader financial pressures hotels continue to face,” per AHLA.
'Not as blockbuster': How host markets are preparing
As cities across the country prepare for the event, hoteliers in Dallas and New York City remain hopeful about performance gains, though they aren't setting their expectations too high.
AT&T Stadium in Arlington, Texas, a suburb of Dallas, is hosting nine World Cup matches, more than any other venue or city in North America. According to Brad Busby, executive vice president of hospitality at Dallas-based RREAF Holdings, this is the equivalent of hosting nine high-profile Dallas Cowboys football games. He anticipates anywhere from a 5% to 20% RevPAR lift for the event, and so far, bookings are in line with these projections.
“While we may see a slight uptick in occupancy, the real gains should come via rate growth.”
Didio Pequeno
Director of hospitality market analytics at CoStar
According to AHLA, hotels across Dallas and Houston are expected to see a “limited incremental lift from the tournament,” with 70% of hoteliers reporting booking pace broadly in line with a normal June and July.
“I think the industry in general expected a little bit more [of a lift], but for us, we based our expectation off of Dallas Cowboys games, quite frankly,” Busby said. “[The] Cowboys have a great draw, and we always see a lift on home games.”
NYC hoteliers are similarly treading cautiously into the tournament.
According to AHLA, two-thirds of NYC hoteliers have reported softer-than-expected bookings for the event that “track with normal summer demand.” Meanwhile, CoStar projects New York RevPAR to grow by about 16% year over year during June and July, largely driven by ADR, which is anticipated to increase by roughly 14% year over year. NYC hotels also performed well last summer, Pequeno added.
“While we may see a slight uptick in occupancy, the real gains should come via rate growth,” Pequeno said.
New York City hotel operator John Beck said he feels confident about hotel performance during the World Cup — although the event “is not as blockbuster as what people were expecting.”
Across his properties, which include Crowne Plaza HY36 Midtown Manhattan and EVEN Hotel New York - Times Square South by IHG, occupancy is up by 8% between June 9, two days before the first game, and July 21, two days after the final.
Beck added that New York differs from other World Cup host markets and is a “one-off” in terms of demand. No matter what’s happening in the world, people are always traveling to experience the Big Apple, he said.
“We're seeing more demand than we're seeing in some of the other markets, which is wonderful,” Beck said. “But for us, compared to a typical June and July, we're seeing a little more domestic travelers right now.”
Nonetheless, Beck maintains New York is equipped to “handle anything” coming its way, including the 1.2 million visitors expected to descend upon the region come June.
“New York is very nimble, and I don't anticipate any issues with hosting this big event,” Beck said.
Recent data from Expedia Group pointed to two host cities expected to see lifts from the matches. Kansas City, Missouri, is a “standout leader,” with travel intent up 135% year over year, while Monterrey in Mexico is posting the highest lodging demand growth, up 255% year over year.
The report finds that neighboring cities also stand to benefit from the sporting event, as travelers make “practical decisions about where to stay.” Fort Worth, Texas, for example, is seeing five times more demand than Dallas, with traveler intent up 175%, per Expedia Group.
Other areas surrounding host cities seeing increases in traveler intent include Tacoma, Washington (outside of Seattle); Montgomery County, Texas (outside of Houston); and Buffalo, New York (outside of Toronto), Expedia Group found.
Do’s and don'ts
As the World Cup nears, as with any major sporting event, there are strategies hotels should employ to generate revenue from the tournament.
For one, hotels shouldn’t price gouge, especially those in secondary markets, as higher prices could lead to guests taking their business elsewhere such as Airbnb or Vrbo, according to Pequeno.
Additionally, hotels in spillover cities near host markets are in a strong position as travelers search for “favorable pricing, more availability, and the chance to turn a match into a wider regional trip,” per Expedia Group. For example, there is a 670% rise in travel intent around the Bay Area, with San Francisco serving as the anchor host city.
Pequeno added that hotels should also generally avoid implementing blackout dates, which is when hotels set aside a certain number of rooms for booking until the World Cup begins, as travelers might go searching for other options.
In addition to room revenue, hotels should focus on capitalizing on food and beverage revenue. With so many World Cup-themed events taking place throughout the summer, hotels have a real opportunity to create ancillary revenue from on-site restaurants, bars and rooftops, according to Pequeno.
“If it turns out that a number of cities do have smaller fan fests or World Cup-themed events, I think that does provide hotels with an opportunity to have their own events and capitalize on that World Cup demand,” Pequeno said.
Ultimately, Busby spoke about the importance of a forecasting approach that’s “grounded in reality,” and cautioned against over- or underestimating demand when the event comes around.
“I'd always rather have realistic conversations around what's going to happen, instead of just rosy expectations of what could happen,” Busby said.
