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For Short-Term Meetings, a Market Squeeze?

The top 25 U.S. markets have seen especially strong occupancy rates driven by group demand, while forward bookings through the end of 2023 are well above last year’s pace. The result: Tight lead times could require deeper pockets.

For planners who are booking meetings between now and the end of the year, the task is notably more challenging than what was anticipated less than two months ago. Economic observers had predicted a mild recession in Q4 that would stunt travel demand, thus boosting room availability and cost negotiability. That doesn’t seem to be in the cards, though.

Leading into Q4, the figures from hotel-industry research firm CoStar found that the second half of September was the strongest it has ever been for hotels in the top 25 U.S. markets. In particular, weekday occupancy gains were peaking. Even San Francisco, the slowest of the top 25 markets to recover from the pandemic, saw 83.2 percent weekday occupancy in the second half of September. As a result, average daily rates for that month were 3.5 percent higher than in September 2022.

Jan Freitag, national director of hospitality analytics for CoStar, says the rebound in corporate-group demand is surprisingly strong in Boston, New York, Washington, and other big cities, which are "all doing tremendously well,” as he noted in an October 4 podcast from Hotel News Now.

However, the trend that should cause more concern for planners of short-term meetings is this: Forward hotel bookings for stays before the end of 2023 were up 3.4 percent in early October versus one year prior, according to CoStar. A couple of examples: As of October 6, 35 percent of hotel rooms in the top 25 markets were already booked for the first week of November, while 24 percent of those rooms were already booked for the second week of December.

These figures are above historical norms, which could allow hoteliers—many of whom adhere to the guidance of a revenue-management platform—to remain firm on guest-room rates for groups looking to meet within 90 days.

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