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1. Lower-income travel demand shows signs of life
Early returns from hotel and airline earnings calls indicate while the summer has been overall weaker than expected, there's still some demand resiliency from travelers in lower segments going forward, Reuters reports.
The news agency points to commentary from Wyndham Hotels & Resorts' recent earnings call, which highlighted better hotel performance in "states like Wisconsin, Michigan, Minnesota and Missouri, indicating steady demand from blue-collar everyday travelers."
United Airlines Chief Commercial Officer Andrew Nocella also indicated his company expects an upswing.
"Just as quickly as demand stepped down in early February due to this uncertainty, it appears that demand is now stepping up," he said.
2. A look at how hotel rooms have evolved to maximize profit
Many hotel room amenities, such as minibars and closets, are becoming harder to come by, and The Wall Street Journal took a deep dive in a video detailing why hotel room design is shifting.
One of the top takeaways is even lower average daily rates and smaller hotel room footprints are key to overall profitability. Plus, they often come with the added benefit of pushing guests into highly profitable public spaces, particularly with bars.
3. What lagging leisure demand means going forward
With little to fall back on in terms of business and group demand, hotels have been struggling to cope with a softer leisure demand environment, said the hotel industry experts on the latest episode of Tell Me More, a Hospitality Data Podcast.
Revenue per available room fell 1.2% for U.S. hotels in June, which STR Senior Director of Analytics Isaac Collazo described as the metric's "first significant decline of the year."
Jan Freitag, CoStar's national director of hospitality analytics, said group room demand remained flat year over year but remains over the pre-pandemic numbers recorded in 2019.
"This year is not written, but where we are right now, with basically flat group room demand year over year ... that does not bode well for the industry overall because going back to Isaac's argument, you need that base in order, then to layer in the other demand drivers, in order to then have pricing power," Freitag said.
4. Hotel sales volume drops in California
The latest California Hotel Sales Survey from Atlas Hospitality Group notes a 7.4% year-over-year drop in transactions at the midyear point, CoStar News Hotels' Bryan Wroten reports.
In all, 113 hotels traded in the state through June, compared to 122 during the first half of 2024. Dollar volume was actually up significantly, though — 17.3% to $1.39 billion in total — largely because of three separate, high-value foreclosure sales.
5. Costs of tariffs coming into focus
A new analysis from the Washington Center for Equitable Growth indicates factory costs could be going up 2% to 4.5% due to U.S. tariff policy, the Associated Press reports.
“There’s going to be a cash squeeze for a lot of these firms,” said Chris Bangert-Drowns, the researcher who conducted the analysis.
He added this ultimately “could lead to stagnation of wages, if not layoffs and closures of plants.”