I'm not saying the sky is falling, but maybe it's lowering.
So far, 2026 has generally been a great year for U.S. hoteliers. Overall, people still want to travel, prioritizing it above other spending. Business travel continues to recover, and group business seems pretty solid still. I'm not even factoring in the impact of the FIFA World Cup matches across the country in June and July.
There are clearly a lot of reasons to be optimistic, especially leisure travel given its role in pushing hotel performance.
But recent news and economic analyses should also give everyone some degree of pause, even if just to double-check some expectations.
Inflation, of course, is an ongoing issue for everyone, businesses and consumers alike. If you attended the opening session of the recent Hotel Data Conference, you heard Tourism Economics President Adam Sacks say inflation is expected to be sticky for the remainder of this year before cooling off next year. The reason? The main factors driving inflation are expected to lessen. These include the one-time, year-over-year price increase of tariff-affected goods coming to an end and energy costs are supposed to come down.
The two ways we measure inflation is month to month and year over year. Both tell us how prices at the latest measurement compare to an earlier point in time.
However, the numbers we focus on only compare current prices to a month or a year ago. If the annual rate of inflation gets anywhere close to Federal Reserve's target of 2%, that's certainly progress, but don't forget that's still growth on top of the higher inflation we've seen for years.
While everyone would love everything to be less expensive, deflation brings its own set of problems.
One of the big problems that can come with inflation is when it outpaces earnings. The newest consumer price index data shows that the growth pace of inflation has been above wage growth for the last four months, Business Insider reports.
People continue to spend money, which of course is good for the economy, but they're paying more for the essentials. That's going to leave less room for discretionary spending, especially so if earnings aren't keeping up with inflation again. No matter how much people prioritize travel, unless you're wealthy, there's only so much money available.
Of course, trips are still possible, but maybe they're smaller in scope.
Sacks pointed to consumer spending outpacing the income growth rate, which means consumers are drawing down on their savings. This trend can't continue forever, so consumers may change directions, at least in the near term.
“You're almost certainly going to see consumers need to replenish those savings,” he said. “It's an unsustainable drawdown, given what we're seeing in inflation relative to income and what we're seeing in terms of spending relative to earnings.”
I'm not saying there's going to be a crash of any kind, but with the economic indicators going up about consumer behavior paired with the generally short booking window the industry has seen — even for major, global, once-in-a-lifetime events — there's not a lot of room before the runway runs out.
Since the pandemic, everyone talks about the importance of flexibility and being nimble. Hopefully, no one has to really put that to the test.
You can reach me at bwroten@hotelnewsnow.com as well as on LinkedIn.
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