Hotel demand, as tracked by STR, was comparable to last year, with a 0.2% increase in nights booked and an average rate of $273. Meanwhile, AirDNA data on short-term rentals showed 11.5% more nights booked compared to June 2023, with an average rate of $239.
In the second quarter of this calendar year (April to June), hotel room night demand remained consistent with last year, showing slight growth of 0.3%. The average rate for hotels during this period was $285, which is 2% lower than last year, but 3% higher than 2022 levels.
Total demand for accommodations has grown 8% so far this year, reaching a total of 3.9 million nights booked. Notably, the rental market expanded its share of the industry, accounting for 44% of total nights booked. Growth in rental demand is 14%, far more than the 3% increase seen in hotel demand. In the US, hotel demand through May 2024 shows no growth compared to last year, according to the US Travel Association.
In June, total lodging revenue estimates reached $174 million, reflecting a 5% increase compared to the previous year. This growth was driven by increasing rental demand and a stable trend in average rates. Specifically, hotel revenue exceeded $100 million (up 1.7%), while rental revenue reached $73 million (up 10%).
Notably, June marked only the second time in history that total year-to-date lodging revenue surpassed $1 billion this early in the year. Despite the growing market share of rental nights, hotels continue to dominate, contributing 63% of lodging revenue so far this year. The average hotel room rate for the year is $317, while the market average rental rate is $245.
Additionally, the Puerto Rico Tourism Company anticipates breaking records for lodging tax revenue for fiscal year 2023-24. Preliminary estimates suggest revenue will reach approximately $145 million, representing a remarkable 100% increase from 2019.
RevPAR (Revenue Per Available Room) is a crucial metric in the hotel industry. It is calculated by dividing total room revenue by the total number of available rooms. Between 2019 and 2024, the supply of accommodations increased by 49%. As a result, the metric is affected in the following ways:
Dilution Effect: New hotels or rentals entering the market can dilute revenue if demand remains constant. This spreads revenue across more rooms, potentially decreasing RevPAR.
Competitive Pricing: Increased supply leads to intense competition. Hotels and rentals may reduce rates to attract guests, increasing occupancy but potentially reducing RevPAR.
Impact of Seasonality and Events: Timing matters. New supply during peak seasons improves RevPAR, while periods of lower demand can lead to lower rates.
Investment and Renovation: Property improvements can justify higher rates, positively affecting RevPAR.
Year-to-date results show that hotel RevPAR increased 2% (from $240 to $245), while average revenue per booking in the rental market decreased 2%. Both hotels and rentals had lower RevPARs in the second quarter (hotels -6%, rentals -7%) due to increased inventory and stabilizing demand.
In June, arrivals at San Juan Luis Muñoz Marín International Airport reached a record 657,000 passengers, an increase of 12% compared to the previous year. Year-to-date arrivals are up 10%, with an additional 300,000 arrivals reaching 3.36 million passengers. Arrivals from North America represent 87% of total arrivals this year and are up 9%, while arrivals from the Caribbean represent 8.7% of passenger volume at SJU with 291,000 passengers (up 20%).
Through June, arrivals from Spain and South America show the largest increases, with 39% and 65% more passengers than in the same period last year, respectively. However, with 89,000 seats combined, arrivals from these destinations represent only 2.7% of total arrivals at Luis Muñoz Marín International Airport.