Though spring has barely begun, U.S. hoteliers are looking ahead to this summer and seeing it’s not all sunny skies.

Leisure demand kept hotels afloat through the pandemic and recovery until group and corporate travel could return. Over the last two summers, leisure travelers showed they’ve booked their revenge travel, at least on land in the U.S., and they headed out of the country.

The summer of 2024 is shaping up to look pretty similar, hoteliers said.

Resorts and outdoor destinations were a huge draw for domestic U.S. travelers during and just after the pandemic, as they crowded national parks and beach destinations, said Patrick Broderick, senior vice president of sales and revenue management for Davidson Hospitality Group’s resort division.

After a period of intense demand highs, there's an inevitable letdown, he said, calling that a "two-and-a-half-year champagne effect that is now coming back."

Hoteliers in the U.S. are preparing for another summer of softer leisure demand, at least relative to recent years, raising the question, "Where is the demand?"

The answer: It’s there, but it’s divided.

There’s been a pullback in demand from Florida and the general panhandle area going into southern Alabama after that region was hugely popular in recent years, said Patrick Short, president of Peachtree Group’s management division. That said, the demand in Florida markets had been inflated, so now it’s coming back to reality.

Peachtree has hotels from the West to the East Coasts, and the properties that have decent business on the books this summer are those near larger concert venues, Short said. In Atlanta, concerts are returning, so the market is seeing more demand on weekends when there are shows.

Youth sports have also been a large demand generator, he said, citing a large tournament venue outside of Kansas City that’s benefiting hotels in the area.

Urban locations generally are popular again, similar to last year, Broderick said. People are returning to these destinations to visit museums and other downtown attractions.

To make up for softer leisure demand, the Embassy Suites by Hilton St. Augustine Beach Oceanfront Resort has focused on group demand this year, General Manager Jason Kern said. While the group demand coming in is at a different rate than leisure, it’s creating a good occupancy base for the hotel. Groups are back to booking further out in the calendar, making that demand segment easier to manage.

Weddings have been big business since the property is on the beach, Kern said. There’s generally a lot of social group business, but the traditional corporate meetings and incentive trips are back as well.

At this point, it’s unclear whether this summer’s leisure travel will look like a more traditional Florida summer — characterized by drive-to visitors — or one attracting more out-of-state guests. For the last couple of years, guests have booked further out and with longer stays, but now the booking pattern shows more within the 30-day window.

With international destinations reopened and cruise lines back in business, U.S. travelers do have more options worldwide, but there's another factor holding people back: high costs.

Inflation is eating into the budgets of some would-be travelers, Broderick said. While high-income travelers are still going strong, that's not the case for everyone, especially people facing credit card debt and loan repayments at higher rates.

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“Is it a surprise they’re not spending all of it on travel?” Broderick asked. “They’re just trying to get by.”

Davidson’s properties have seen some rate retraction, Broderick said. The company had projected a 2% demand increase across its portfolio, but demand has been flat this year. The resorts and destination hotels are hurting the most, lagging as much as 3% in some markets.

Florida in particular has had a rough start to the year as poor weather turned travelers’ sights elsewhere, he said. At this time of year, that can sway the larger economy given the normal amount of travel headed to the U.S. Southeast.

“We were gloomy,” Broderick said. “There was a lack of sunshine, so that affects you if you’ve got a portfolio where there’s 11 resorts in the state of Florida.”

Davidson has been doing what it calls “buying a little more” on occupancy by promoting discounts through online channels not exclusive to the hotels, Broderick said. Shifting inventory to online travel agency sites results in a higher cost of guest acquisition, but the hotels need to create demand, even though that does put additional pressure on rates.

Rates are up in some markets, he said. Urban destinations and some suburban hotels, depending on their demand generators, are performing well. There’s a trickle of business travel, though it’s still not back to pre-pandemic levels.

Those rate pressures combine with those created by rising food and labor prices, Broderick said.

“There’s a business model there that needs to be very carefully watched because it doesn’t work as well in that type of environment,” he said. “You’ve got to be very smart at this time to get the right business at the right time.”

Guest expectations are definitely high, Kern said. They were fine with reduced housekeeping levels during and right after the pandemic, but that’s changed now.

“They want the room servicing now, and they want all the amenities that they paid for pre-pandemic back,” he said.

The Embassy Suites by Hilton St. Augustine Beach Oceanfront Resort has embraced that, and it has put everything back in play to meet guests’ higher expectations, Kern said.

Though not as high as during the recovery, there’s still an uptick in Thursday night bookings compared to pre-pandemic levels when that night was the softest of the week, Short said. Many guests still have the option of working from home or otherwise have flexible schedules.

Guests arrive on Thursdays because they’re working remotely and can be settled in for the start of the weekend instead of arriving on Friday, he said.

“When we do see the weekend business in some of these locations, we are seeing more of that three-, four-night stay versus just the two nights,” he said.

A key demand generator of late has been the trend of guests booking large social groups or with their families, Broderick said. They’re dedicating a lot of time to these trips and planning them further ahead because the group size is a little larger than just a couple or a small family.

For these types of guests, it’s more than just about selling them a room, he said.

“They’re not buying a room. They’re not buying the hotel. They’re buying an experience, and you really have to be able to go all-in with that,” he said.

Leisure guests continue to book closer to their stays, Broderick said. They don’t need to look further ahead because they know there will be deals.

“We kind of inadvertently encouraged them to wait because we’re able to offer last-minute deals,” he said.

Cancellations are higher than historical norms, he said. People are booking multiple options and then backing out based on the cancellation rules. The guests have leverage at the moment, so Davidson is working on what its teams can do to prevent cancellations that doesn’t discourage bookings.

“We just need to manage them and make sure the customer doesn’t choose somewhere else,” he said.

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