Cloudbeds, the hospitality management platform that drives more bookings and happier guests for independent lodging businesses around the world, urged independent hoteliers to look beyond increasing their average daily rates (ADR) as a hedge against high inflation.
This recommendation follows Cloudbeds' 2024 State of Independent Lodging report, which reveals that lodging companies can no longer rely on increasing ADR as the primary driver of hotel performance. Instead, they must proactively adopt additional strategies to offset rising operating costs.
Although many hotels are already rationalizing their staffing models and cutting housekeeping services, Cloudbeds emphasizes that independent hoteliers can explore other avenues to reduce costs and increase prices, particularly in food and beverage services, parking, ancillary fees and non-refundable fees.
Sebastien Leitner, vice president of partnerships at Cloudbeds, said: "While hotels have seen record ADR, it has not been enough to offset rising operating expenses and global inflation. Hoteliers face a critical issue in the face of Looking ahead: If travelers are becoming more price sensitive, how much longer can pricing be forced to offset rising costs? ADR is no longer a hedge against inflation. Instead, "We will see independent businesses move toward streamlined operations that maximize profitability and delight guests."
The technology provider highlighted that room rates increased by 20% in 2023 compared to their 2019 levels. However, amid this increase, global inflation peaked at 8.7% in 2022 before declining slightly to 6.9% in 2023. Consequently, operating expense growth outpaced revenue growth for many independent hotels.
Cloudbeds' findings are based on data from more than 10,000 independent properties, spanning boutique hotels and guesthouses, B&Bs and hotel groups in more than 100 countries across North America, Latin America, Europe and the Asia-Pacific region.