THE STATE OF the U.S. hotel industry is strong going into 2024, according to American Hotel & Lodging Association's 2024 State of the Hotel Industry report. Average hotel occupancy is expected to reach nearly 63.6 percent in 2024, a slight increase from the 62.9 percent in 2023 but below the 65.8 percent rate recorded in 2019. Nominal RevPAR is also anticipated to rise to $101.82 in 2024, up by 4 percent from 2023 and over 17 percent from 2019.
AHLA projects hotels will pay employees a record sum of over $123 billion in wages, salaries, and compensation in 2024, surpassing $118 billion in 2023 and $102 billion in 2019. Hotels are expected to add approximately 45,000 employees this year, while the industry's workforce remains nearly 225,000 below the almost 2.37 million employed in 2019, the AHLA report said.
The report, projecting persistent challenges for hoteliers in the face of nationwide labor shortages as they approach 2019 occupancy levels, draws on data and analysis from Oxford Economics. It was developed in collaboration with AHLA Premier Partners: STR, Avendra, Ecolab, Encore, JLL, Oracle, and Towne Park.
Record high in tax revenues
Hotels are projected to generate approximately $54.4 billion in state and local tax revenue in 2024, up from about $52.4 billion in 2023 and $43.4 billion in 2019, the report added. The 2024 projection includes over $26 billion in lodging-specific taxes. Hotels are also expected to contribute around $29 billion in federal tax revenue in 2024, compared to about $27.8 billion in 2023 and $24.3 billion in 2019.
“2023 was a significant comeback year for hoteliers, and our outlook for 2024 shows the industry is poised to build on that success,” said Chip Rogers, AHLA’s president and CEO. “The expectation of higher occupancy rates and record amounts of wages and tax revenue point to a strong future. But hoteliers face continued challenges, including a nationwide labor shortage, persistent inflation, high interest rates and a federal regulatory agenda that’s making it harder for hoteliers to do business. AHLA will continue to advocate for hoteliers at all levels of government to solve these problems and keep our industry on an upward path.”
The inflation pace has slowed, but prices remain high for numerous hospitality-related products. AHLA Premier Partner Avendra forecasts sustained single-digit inflation through at least the first two quarters of 2024 across various items. Furthermore, nominal hotel guest spending on lodging, transportation, food and beverage, retail, and other expenses is projected to reach $758.6 billion in 2024, nearly 5 percent higher than 2023 and almost 24 percent above 2019 levels.
Encore, an AHLA Premier Partner, reported that 47 percent of meeting professionals plan to increase budgets for 2024, while 40 percent expect budgets to remain unchanged, according to the company’s fourth quarter 2023 Planner Pulse survey.
The U.S. Chamber of Commerce recently revealed that the hospitality sector consistently holds the highest worker quit rates across all industries, surpassing 4.5 percent since July 2021. Concurrently, the leisure and hospitality sector maintains the highest hiring rate, fluctuating between 6 percent and nearly 19 percent.
