Pace of U.S. Hotel Rate Rises Moderated in May

Rising hotel room rates in the U.S. are still contributing to an overall rise in the national cost of living, but the pace of hotel rate hikes is slowing, according to new numbers released on Tuesday.

Hotel rates rose 1.8% in May from April, according to the U.S. Bureau of Labor Statistics, which reported the seasonally adjusted percentage changes.

Looking longer-term, rates in May were 3% higher than a year earlier. That’s a much lower annualized inflation rate than the 22.2% a year ago.

The government also provided an update on recent monthly hotel rate changes: Rates dropped 3% in April versus March. Rates rose 2.7% between February and March.

The backstory is an overall moderation in the recent bout of inflation. The hotel sector has seen dramatic spikes in nightly rates compared to post-pandemic lows, as rises in demand collided with strained supply from properties struggling to find and keep workers.

“In the U.S., the average daily rate on a real basis is a dollar off where we were in March 2019,” said Amanda Hite, president of STR, the leader in hotel performance benchmarking, in an interview last week. “So for all the price growth we’ve seen, we aren’t back to where we were pre-pandemic, on average overall.”

The government data includes “lodging away from home including hotels and motels” but excludes lodging at schools and is based on survey data.

For more context, read: “Hotel CEOs Are Loving Limited Rooms and High Prices.”