According to the American Hotel & Lodging Association’s "2023 State of the Hotel Industry" report, the industry is set to surpass prepandemic levels of demand, nominal room revenue and state and local tax revenue this year while inching closer to other key 2019 performance metrics.
The report—which also forecasts that operational challenges like 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.
- 2023 nominal room revenue is projected to reach $197.48 billion compared to $170.35 billion in 2019. While these numbers are not adjusted for inflation and real revenue recovery will likely take several more years, AHLA sees the trendlines as "positive."
- 2023 roomnight demand is projected to surpass prepandemic levels (1.3 billion occupied roomnights versus 1.29 billion in 2019). The 2023 projection is a 56.9 percent improvement over 2020’s low of 831.64 million occupied roomnights. From 2021 to 2022, U.S. hotel demand improved 11.1 percent.
- 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 percent in 2023—just shy of 2019’s 65.9 percent and a significant improvement over 2020’s historic annual low (43.9 percent).
- 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 but a 7.4 percent increase from 2022.
- Inflation for a number of hospitality-related products will continue to run 5 percent to upwards of 10 percent for the next few quarters, according to Avendra.
- According to Encore, 70 percent of planners surveyed for the company’s "Fall 2022 Planner Pulse Report" were either booking or actively sourcing new events, and 61 percent expected to have larger budgets in 2023.
- Most U.S. hotel markets recovered top-line performance at or beyond 2019 levels in 2022, according to STR’s analysis. However, the percentage of recovered markets dips when adjusting for inflation and drops further when shifting the focus to profitability. The return of business travel in the fall of 2022 pushed more major markets closer to their prepandemic levels in gross operating profit per available room.
“Three years after the unprecedented hardships our industry faced due to the pandemic, hotels continue to make significant strides toward recovery,” AHLA President & CEO Chip Rogers said in a statement. “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, roomnight 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.”
Taking Action
The AHLA has, over the past year, taken steps to combat the challenges facing the industry. To help hotels fill open jobs and raise awareness of the industry’s career pathways, the AHLA Foundation’s “A Place to Stay” multichannel advertising campaign is now active in 14 cities. In addition to doubling its financial investment in the campaign, the foundation has also expanded its bilingual English/Spanish efforts and developed several enhanced digital strategies to further target prospective employees.
Additionally, AHLA affiliate “Hospitality is Working” recently launched the Workforce & Immigration Initiative to encourage the U.S. Congress to address workforce shortages with bipartisan solutions to incorporate more immigrants into the American economy. Accompanying the launch, the Workforce & Immigration Initiative released a digital advertising campaign in Washington, D.C., and key states, as well as a new survey underscoring voters’ support for reform that prioritizes the U.S. workforce, economy and securing the border.