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Research & Analytics Update - October 09, 2024

Wednesday, October 09, 2024 Research

Lodging and Cruise Forecast

According to the Global Hotel Industry Outlook prepared by industry partner Skift, the U.S. travel industry faces moderate pressures due to economic uncertainty, shifting travel patterns, and increased competition from alternative accommodations. CBRE, a global leader in commercial real estate services and investments, revised its forecast for U.S. revenue per available room (RevPAR) growth to just 1.2% for the entire year. Back in February, they projected 3% growth, but this was reduced to 2% in May.

Urban and airport hotels are expected to outperform, while resort locations underperform relative to the boom they experienced after the pandemic. The limited supply of new hotels is helping to maintain prices, while some consumers are opting for short-term rentals due to cost, location, or the need for more space. According to the U.S. Travel Association, year-to-date U.S. hotel demand has grown by 0.3%, with the Washington D.C. area seeing the highest growth at 5%.

Locally, the lodging market reflects many of the national trends identified by CBRE. From January to August, hotel demand grew by 1% compared to the same period in 2023. Average hotel rates have risen by 2%, while the number of available hotel nights has increased by 4%. Hotel RevPAR has decreased slightly by 0.4%. Meanwhile, short-term rental demand surged by 13%, now accounting for 45% of total lodging demand year-to-date.

Read in Spanish: Research and Analytics Update - October 09, 2024

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The Cruise Lines International Association (CLIA) has a positive outlook for the 2024-2025 Caribbean cruise season. Their latest reports indicate that the Caribbean remains a highly popular destination, with forecasts predicting a 10% growth in cruise capacity from 2024 through 2028. Cruises are a top choice for multi-generational travelers, with one-third of families sailing with at least two generations and 28% of travelers sailing with three to five generations.

Although cruise visitors are often thought to be older, CLIA reports that the average cruise passenger is 46 years old, and 36% of all passengers are under 40. Millennials are the most eager to travel, including by cruise ship, while older generations prefer to include future cruises in their travel plans.

Accessibility is also a key consideration for many travelers. Currently, over 100 accessible shore excursions are available at various cruise ports, and 45% of cruise travelers booked one in the past year. For more information on accessible travel during your visit to Puerto Rico—including van and wheelchair rentals, as well as a guide to the island’s top accessible attractions—please visit the dedicated page on our website.

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Cruise passenger arrivals are already outpacing last year, and the San Juan port is expected to handle approximately 280,000 homeport passengers, in addition to many more day-trip visitors, by the end of this fiscal year.

In October alone, the port expects to receive 27 vessels bringing 79,000 passengers, with 20% of those embarking in San Juan. Nearly a quarter of this year’s visitors will arrive via Carnival Cruises, followed by Royal Caribbean (18%), Norwegian (17%), and MSC (12%). While most homeport vessels depart on weekends, the busiest days through the end of the year will be Tuesdays and Wednesdays. Christmas Day is expected to bring over 20,000 visitors, based on the scheduled passenger capacities of arriving vessels.

Cruise tourism brings economic and social benefits to local communities that extend beyond the cruise itself. Although the economic impact of day visitors in San Juan is lower than that of extended-stay vacationers, CLIA reports that 6 in 10 cruise passengers return to a destination they first visited via cruise. This highlights the importance of offering a warm, welcoming Boricua experience to our San Juan cruise visitors.

On September 25, 2024, a groundbreaking ceremony was held by ENKA Construction, the main contractor for the San Juan Cruise Port Refurbishment Project. San Juan Cruise Port (SJCP) also announced the appointment of Clarivette Díaz as its new general manager, effective in November.

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The MICE (Meetings, Incentives, Conventions, and Events) travel segment continues to drive future hotel demand across the city and resorts. From January through August, Discover Puerto Rico’s sales department secured over 115,000 group room nights across 236 events, representing a 17% increase compared to the same period last year. As a key player in citywide programs and events, the Puerto Rico Convention Center recently won the prestigious Stella Award from Northstar Meetings Group as the “Best Convention Center” in the international region and U.S. territories.

According to the U.S. Travel Association, meeting planners remain optimistic about the continued recovery of in-person events. Launched last year, the “Make Your Meeting Boricua” campaign continues to educate and promote the Island within the meeting planning industry. As part of ongoing efforts to measure the campaign’s performance, Discover Puerto Rico will conduct a new study to evaluate the effectiveness of its creative messaging and its impact on elevating Puerto Rico’s awareness and reputation as a premier destination for meetings and events.

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