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Hotels continue to recover in 2023 as industry begins new era of operations

The hotel industry in 2023 is projected to surpass pre-pandemic levels of demand, nominal room revenue and state and local taxUS hotel construction pipeline revenue, while inching closer to other key 2019 performance metrics, according to the American Hotel & Lodging Association’s 2023 State of the Hotel Industry Report.

The report, which forecasts that operational challenges such as staffing shortages and economic factors will replace COVID as hoteliers’ top concerns, is based on data and analysis from Oxford Economics and was created in collaboration with AHLA Platinum Partners STR, Avendra, Ecolab, Encore, and Oracle. The top findings of the report include:

  • 2023 nominal room revenue is projected to reach new heights ($197.48 billion vs. $170.35 billion in 2019). While these numbers are not adjusted for inflation, and real revenue recovery will likely take several more years, the trendlines are positive.
  • 2023 room-night demand is projected to surpass pre-pandemic levels (1.3 billion occupied room nights vs. 1.29 billion in 2019).
  • Hotels are expected to generate $46.71 billion in state and local tax revenue in 2023, up from $41.11 billion in 2019.
  • Average hotel occupancy is expected to reach 63.8% in 2023 – just shy of 2019’s 65.9%.
  • Staffing is expected to remain a significant challenge for U.S. hotels in 2023, with hotels projected to employ 2.09 million people in 2023, down from 2.35 million in 2019.
  • Inflation for a number of hospitality-related products will continue to run 5% to upwards of 10% for the next few quarters, according to AHLA Platinum Partner Avendra.
  • Group business has a bright future: AHLA Platinum Partner Encore reports that 70% of planners surveyed for the company’s Fall 2022 Planner Pulse Report were either booking or actively sourcing new events, and 61% expected to have larger budgets in 2023.

“Three years after the unprecedented hardships our industry faced due to the pandemic, hotels continue to make significant strides toward recovery,” said AHLA President & CEO Chip Rogers. “2022 saw one of the strongest summer travel seasons ever, and this year we expect hotels to reach new heights in terms of room revenue, room-night demand and state and local tax revenue. But when inflation is taken into account, our industry likely won’t see full recovery for several more years. Nevertheless, hotel performance is trending in the right direction – great news for our industry and our employees, who are enjoying better pay, more career opportunities, upward mobility and flexibility than ever before.”

To help hotels fill open jobs and raise awareness of the hotel industry’s 200+ career pathways, the AHLA Foundation’s “A Place to Stay” multi-channel advertising campaign is now active in 14 cities, including Atlanta, Baltimore, Chicago, Dallas, Denver, Houston, Los Angeles, Miami, Nashville, New York, Orlando, Phoenix, San Diego, and Tampa. For more info on the campaign, visit thehotelindustry.com.

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Additionally, AHLA affiliate “Hospitality is Working” recently launched the Workforce & Immigration Initiative. The effort is aimed at urging Congress to address workforce shortages with bipartisan solutions to incorporate more immigrants into the American economy. You can learn more about the effort here.

Tags: hotels, industry begins, new era, operations, recover in 2023

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