Why are Marriott Hilton and Hyatt saying hotel prices are only going up
Despite high inflation, a weakening economy and fears of a recession, the hotel industry is not experiencing any slowdown.
It’s the exact opposite, with Hilton CEO Chris Nassetta predicting that the hotel chain will “have the biggest summer we’ve ever seen in our 103-year history this summer. Few industries have been hit as hard as travel by the Covid-19 pandemic, which has brought nearly all leisure and business travel plans to a halt.
But as vaccination rates and looser restrictions have spread across the country, travelers have returned. In May, global leisure and business flights exceeded 2019 levels for the first time since the pandemic began.
But while that has come at a cost, fueled by both high demand from fellow travelers and other inflationary pressures, hotel operators still believe there is room to raise prices further. The price has gone up for everything, so we are no different than when you go to a gas station or the supermarket or any other aspect of life; it’s discretionary,” Nassetta said on CNBC’s “Squawk on the Street” on Monday.
Nassetta said two things were keeping demand high: incremental savings of more than $2.5 trillion from the leisure consumer and strong corporate balance sheets combined with “very good” profitability. It’s been two years from both a leisure standpoint and a business standpoint with meetings and events not being able to do the things they need to do,” he said. “They have the availability of discretionary income in both segments to do it and they have the need, and that is matching demand.
Marriott CEO Tony Capuano said that over Memorial Day weekend, the company’s revenue per available room, which measures hotel performance, was up about 25% in 2022 compared to 2019. Marriott’s luxury portfolio, which includes hotels such as JW Marriott, Ritz-Carlton and St. Regis, those hotels saw a nearly 30% increase in rates in the first quarter of 2022 compared to 2019.