• Rebounding Group Travel Means One Hotel Metric Could Suffer

    By Jack Witthaus
    CoStar News

     
    A commonly used hotel metric will edge lower next year despite the hospitality sector improving, according to projections for 2022 by CoStar analysts.

    Convention hotels are expected to see falling average daily rates, a measure of how much revenue is generated per room, as group travel increases. That's because convention hotels mostly relied on transient travelers, who pay higher room rates, in 2021 as the pandemic limited the amount of large gatherings. The projected rise in group travel, which packs hotels with guests paying discounted rates, is seen driving average room rates lower in 2022.

    Falling average daily rates typically aren't a good thing for convention hotel operators, but in this case, they are expected to be OK with the metric suffering. More group travel is seen as boosting occupancy, revenue and ancillary spending at hotels, meaning greater profitability. Further, the return of group travel is expected to stabilize a convention hotel industry that has been hurting since March 2020.

    Source: www.CoStar.com