Although cheap airplane tickets remain plentiful, discount hotel rooms, discount travel packages, and cheap vacation packages are becoming more difficult to find in select U.S. cities as hotels increase rates again this year especially in large cities such as San Francisco.
2012 was a record year for the American hotel industry. Total rooms sold last year were the most ever, exceeding 1.1 billion.
Increasing demand for hotel rooms resulted in the average daily rate for a U.S. hotel room rising by a little more than 4 percent over 2011. Given that this was an average, there were select hoteliers that were able to successfully increase their rates by as much as 10 percent last year.
Factors driving increasing hotel room rates varied by market. West Texas and North Dakota saw dramatically increased demand for hotel rooms, and thus their rates, due to newly discovered energy sources followed by employment booms.
San Francisco experienced the largest jump in room rates in 2012 with an almost 11 percent increase over the prior year. To avoid having to pay San Francisco hotel room prices some travelers have started going to San Jose and Oakland where cheaper hotel rates are available. This trend resulted in those markets increasing their average room rates by over 9 percent.
Of the 162 markets where experts track hotel rates, only eight reported room rates in 2012 that were lower than a year before.
One of the cities where the average rate dropped was Washington, D.C. where rates have had to respond to new supply of hotel rooms, dependence on government per diems, and overall weak demand growth.
Experts expect that room rates will increase by almost 5 percent in 2013. Select markets will witness stronger growth and hotels in the countrys 10 largest hotel markets are expected to increase rates by more. Luxury hotels are forecast to increase room rates by almost 7 percent, outpacing all other chain affiliated hotels.
The following are forecasted 2013 average room rate changes in 10 of the American cities expected to see the highest increases and the 10 American cities expected to see the lowest average increases:
Top 10 Hotel U.S. markets
Texas - West 21%
Oahu Island, Hawaii 11%
San Francisco/San Mateo, Calif. 11%
North Dakota 10%
San Jose-Santa Cruz, Calif. 10%
Charlotte, 9%
Oakland, 9%
Indianapolis, 9%
New Mexico South 9%
New Orleans, 9%
Bottom 10 U.S. hotel markets
Colorado Springs, 1%
Tulsa, 1%
Fort Worth-Arlington, Texas (0%)
Augusta, Ga. (0%)
Scranton-Wilkes-Barre, Pa. (0%)
New Jersey Shore (1%)
Washington, D.C.-Md.-Va. (1%)
California North Central (1%)
Tucson, (1%)
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