Expect Hotel Rates to Rise “Significantly” in 2015

(Reprint of an article in Travel Pulse by Ryan Rudnansky, January 26, 2015 – Dave Hogg)

U.S. hoteliers could “aggressively” raise hotel rates this year, according to CNBC.

In a later session at the Americas Lodging Investment Summit (ALIS) conference in Los Angeles today, presenters will detail what to expect in 2015, including the motion to push “significant” hikes on guests, per the report.

One of these presenters, Mark Woodworth of PKF Hospitality Research, is projecting there to be a 5.4 percent increase in the national hotel rate in 2015, compared to 2014.

This is just the national average, of course. Some cities are expected to raise rates even more. San Francisco, Oakland (a rising destination) and Santa Cruz in California are expected to jack up their hotel rates by up to 10 percent, according to Woodworth. Denver hoteliers are forecasted to raise rates by 9.1 percent, while those in Nashville are expected to raise rates by 8.6 percent.

Naturally, travelers will react unfavorably to the price hikes, which should slow demand throughout the course of the next 12 months, Woodworth said. But that’s not going to be enough to affect profits all that much. Woodworth is projecting U.S. hoteliers to post a 13.2 percent increase in profits in 2015 to record numbers.

Oh yeah, and there’s expected to be another double-digit increase in hotel profits in 2016, as well.

Hoteliers can do this, of course, because occupancy rates are high. From the West Coast to Chicago to Boston, hoteliers are experiencing success as the U.S. climbs out of the recession and has money to spend again.

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