Top 10 Hot Hotel Markets in USA

I came across two data sources over the past couple of days that show interesting trends across the USA for airport flight reductions and average hotel rates for dozens of major cities around the USA.

This past month I have been seeing articles about the impact of airport flight cutbacks on the hotel industry.  An article I read estimated every 10% reduction in flights creates a 3.9% reduction in hotel demand for the area.  I imagined I could look at the data I saw on flight cutbacks and hotel occupancy and have some revelation, but it didn’t turn out that way.

Last Friday, USA Today produced a graphic showing the reduction in percentage of passenger seats for flights at 300 airports in the USA based on November 2008 schedules compared to November 2007.  My initial shock was to see my local airport in Monterey (MRY) is listed with 24.5% fewer seats.  And yet, I just searched for tickets from Monterey to Las Vegas and the fare is $100 all-in roundtrip, the lowest fare I’ve ever seen to Las Vegas from Monterey with our new airline service on Allegiant Airlines.



Smith Travel Research tracks US lodging industry revenue and publishes weekly reports.  The data for June indicates a significant slowdown in hotel occupancy along with a continued increase in average room rates.  The summer months of 2008 are seeing drops from summer 2007.  June 2008 hotel occupancy dropped 4.5% compared to June 2007 while the average room rate climbed 3.2% over the past year.

The good news for consumers is the average room rate increases are slowing in most markets as we progress through 2008.  My observation for the San Francisco Bay area is some of the lowest rates I have seen in a couple of years occasionally pop up over the past few months at several upper upscale hotels I track.  This is even as San Francisco has one of the strongest hotel markets in the USA due to high occupancy, high rate increases, and increased international tourism.  The Le Meridien Hotel was $139/night over the July 4th when usual rates are $200+ for this hotel and I have seen the rates surpass $500 during some weeks. 



Impact of Several Years of High Hotel Room Rate Increases 

The budget traveler has seen average USA hotel rates rise 25%, and in some hotel markets like Hawaii even up 50% over the past 4 years.  Has your salary increased 50% in that time frame?  If not, then you are feeling the economic pressures on your travel lifestyle.

Assume Hilton, Starwood or Hyatt top elite status is achieved on hotel stays for a frequent guest with 30 to 40 nights per year in hotels.


2004 Full service hotels in USA $117 ADR (+12.5% tax) = $131.63


2005 +5.5% = $138.87

2006 +7.4% = $149.15

2007 +5.9% = $157.95

2008 +4.4% = $164.90


The average daily rate for a full-scale hotel in 2008 is $33.27 more than 2004 (a 25% increase in 4 years.) 

30 nights for top elite status will cost $1,000 more in 2008 than 2004 if you are in the average rate market.  New York, Miami, San Francisco, and Phoenix will cost you even more.


2004 the cost of 30 hotel nights at full service hotels averaged about $4,000 after taxes ($3,949).


2008 the cost has increased to $5,000 for 30 nights or your $4,000 budget that bought 30 nights 4 years ago now only buys 24 hotel nights.  Think one less week vacation and not enough nights for top elite frequent guest status.


Top 10 Hot Hotel Markets in USA

Source: TWR Hotel Outlook Summer 2008, Cornell University, School of Hotel Administration

Average Daily Rate (ADR) annual increase over 7% from First Quarter 2007 to First Quarter 2008

1.      Charlotte, NC  9.6%

2.      Houston 9.1%

3.      San Francisco, 8.8%

4.      New York City 8.7%

5.      Fort Worth, TX 8.3%

6.      Columbia, SC 7.9%

7.      Richmond, VA 7.6%

8.      Cincinnati, OH 7.1%

9.      Portland, OR 7.1%

10. Philadelphia 7.0%


11 Cool Full-Service Hotel Markets

ADR annual increase less than 2% from First Quarter 2007 to First Quarter 2008

1.      Trenton, NJ -3.1%

2.      Fort Lauderdale, FL -1.5%

3.      Tucson, AZ -1.3%

4.      New Orleans, LA -0.8%

5.      Cleveland, OH 0.4%

6.      San Diego, CA 0.4%

7.      Miami, FL 1.0%  (already overpriced at #1 upscale ADR in USA in 2007)

8.      Columbus, OH 1.1%

9.      Long Island, NY 1.2%

10. Baltimore, MD 1.3%

11. Atlanta, GA 1.6%



10 Expensive Cities for Full Service Hotels

(Room Rate Percentage increase from First Quarter 2007 to First Quarter 2008)


1.      West Palm Beach, FL $265.18  (4.9%)

2.      New York City $254.71 (8.7%)

3.      Miami, FL $249.53  (1.0%)

4.      Phoenix, AZ $203.10  (4.8%)

5.      Fort Lauderdale, FL $195.38  (-1.5%)

6.      Honolulu, HI $186.86  (6.0%)

7.      Washington, DC $175.33  (2.2%)

8.      San Francisco, CA $174.65  (8.8%)

9.      San Diego, CA $171.67  (0.4%)

10. Los Angeles, CA $161.91 (5.1%)


10 Low-Cost Cities for Full Service Hotels

(Room Rate Percentage increase from First Quarter 2007 to First Quarter 2008)


1.      Dayton, OH $83.87 (2.1%)

2.      Albuquerque, NM  $96.38  (5.6%)

3.      St. Louis, MO  $101.45  (2.2%)

4.      Columbia, SC $101.63  (7.9%)

5.      Omaha, NE  $102.94 (5.6%)

6.      Cleveland, OH $104.43  (0.4%)

7.      Richmond, VA $107.02  (7.6%)

8.      Cincinnati, OH $107.41 (7.1%)

9.      Kansas City, MO $108.34  (4.9%)

10. Albany, NY $110.10  (2.6%)






About Ric Garrido

Ric Garrido of Monterey, California started Loyalty Traveler in 2006 for traveler education on hotel and air travel, primarily using frequent flyer and frequent guest loyalty programs for bargain travel. Loyalty Traveler joined BoardingArea.com in 2008.

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  1. It is no doubt that hotel really is a great help to everyone of us. Going on trip or vacation and you need to get an accommodation lets admit it no one shall offer you there house specially if you are some strangers or you will be staying longer on someones house and just to get away from problems best thing to do is find some hotels to stay into. In hotels, you are very much welcome and being served with your needs. You will feel it’s your second home. It also helps man to unwind or just for change, experience that luxury of life especially on 5-star hotels.

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