Excerpt from CoStar

Three trends give U.S. hoteliers confidence that demand for hotel rooms will continue to grow this year: remote work, rising wages and a larger population of retirees.

Speaking on a "Boardroom Outlook" panel at the 2023 Americas Lodging Investment summit, Pat Pacious, president and CEO of Choice Hotels International, said these are long-term fundamentals that bode well for leisure travel.

“If you look at remote work, it’s really sort of lifted that constraint of time where the workweek is now maybe three days a week and the other two days of the week people have the flexibility to work from anywhere,” he said. “In our business, we’re seeing more Thursday night check-in for weekends and Monday morning check-out.”

Wages are “more sticky” than other aspects of inflation, Pacious said. And with the middle class benefiting from rising wages, Pacious added those individuals are using that extra income on leisure travel.

Additionally, the labor force participation rate is significantly below where it was pre-pandemic, he said.

“With all the retirements that you’re seeing … a lot more people have freedom to travel because they’re not in the workforce,” he said.

Jim Merkel, co-founder and CEO of Columbus, Ohio-based private investment firm Rockbridge Capital, said to be in the hospitality industry, you’ve got to be optimistic.

However, to successfully develop, own or operate hotels, hoteliers must understand the demands of travelers and meet or exceed them.

“Twenty years ago, we were redeveloping and developing hotels in a much different way than we’re doing it today. It’s simply to create places where people want to be. ... In order to be successful you’ve got to meet the demand on what it wants,” Merkel said. “We certainly have headwinds; we generally look at it as the wind behind us instead of in our face. We’re still going forward; we just might have to do a little more tacking to get to the destination.”

Business travel continues to lag leisure in the U.S., but Pacious said that's not necessarily a bad thing for Choice.

More travelers are paying for their own overnight stays, instead of relying on corporate budgets, and “they tend travel in the upper midscale, midscale and economy segments,” he said.

“We’ve always had a strong base of retired baby boomers, and we’re seeing more of that influx into our hotels,” Pacious added.

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