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Research and Analytics Update - September 26, 2024

Thursday, September 26, 2024 Research

As the Caribbean moves into the post-summer travel season, lodging demand in August remained relatively stable, increasing by 1% compared to 2023, according to data from STR (Smith Travel Research) and AirDNA. However, a 5% drop in hotel demand from last August was driven by fewer group room bookings and the impact of Tropical Storm Ernesto. With hotel supply nights up by 3.9%, average occupancy fell to 68.7%, a decline of 9 percentage points from last year.

On the other hand, rental demand surged in August, with a 10% year-over-year increase in rental nights. More than 290,000 room nights were booked across the Island, setting a new record with rentals, accounting for 46% of total lodging demand. Despite lower hotel occupancy, steady hotel rates and strong rental demand pushed total lodging revenues to over $150 million, up 2% from 2023.

Year-to-date, total lodging demand has reached 5.2 million nights, marking a 6% increase from the same period last year as lodging revenue continues to climb, reaching $1.4 billion so far—7% higher than in 2023.

Read in Spanish: Research and Analytics Update - September 26, 2024

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As of September 8th, travel bookings for the next six months show mixed trends, with hotel reservations for the fourth quarter performed well, with committed occupancy 2.4% ahead of last year, and rental nights up by 15% compared to the same period in 2023. Most of this growth is concentrated in November and December.

The outlook for the winter rental market is particularly strong, with 17% more rental nights already booked for the first quarter of next year. Airport arrivals, as tracked by Future Partners, are expected to rise by 18% and 19% over the next two quarters, excluding local travelers. However, passenger arrivals to Ponce and Aguadilla are projected to decline by 11% in Q4 and 8% in Q1 2025 due to changes in flight itineraries.

By contrast, hotel occupancy for the first quarter of next year is slightly lagging, with reservations showing a 2.1% decrease compared to the same period last year. Group room bookings for January and March are also pacing below current-year levels, though February is ahead, thanks to three groups contributing over 1,900 room nights for sports events on the Island.

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According to the September edition of the “State of the American Traveler” report by Future Partners, nearly one in four Americans traveled specifically to attend a sporting event. While most (16.7%) attended professional sports, 13% participated in semiprofessional or amateur events.

Although dining, shopping, outdoor activities, and visits to historical or national parks remain the top reasons for recent overnight trips, 8% of travelers cited sports-related activities as a key motivation. Among these sports travelers, 62% are avid followers of professional sports held in large venues. This group is predominantly affluent Millennials, with household incomes exceeding $200,000, and typically live in urban areas across the U.S. In the short term, 72% of these sports enthusiasts plan to prioritize spending on travel within the next three months.

The sports event travel market has undergone significant changes post-COVID. The pandemic initially caused widespread cancellations and spectator restrictions, resulting in a steep decline in sports tourism and related revenues. With international travel restrictions in place for an extended period, there was a noticeable shift towards more local and regional sports events. Looking ahead, the 2026 World Cup in various U.S. cities has raised concerns about visa processing delays, which could affect international fans. The U.S. Travel Association has highlighted this issue as critical to boosting recovery in the international inbound travel market.

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Since the pandemic, the sports market has become a key driver for group business in Puerto Rico. Under the leadership of Sales Director Carlos Deliz, Discover Puerto Rico’s team has successfully booked or assisted in booking over 140 sporting events across the Island since 2021. These events, with an average peak room count of 103, have generated more than 91,000 room nights and had an economic impact exceeding $130 million. Notable events include the Caribbean CueSports International EXPO 2023, Caribbean Volleyball Championships, Iron Caribbean Winter Swimming Training Center, ISA World SUP & Paddleboard Championships, FIBA 2024 Basketball Olympic, and NORCECA Women’s Pan-American Cup among others.

Discover Puerto Rico is also actively pursuing various amateur and semiprofessional events in various sports, including pickleball, dodgeball, golf, water polo, and disc golf. On the professional sports front, recent upgrades to the Hiram Bithorn Stadium in San Juan will facilitate the hosting of more major league baseball games and one of the initial rounds of the 2026 World Baseball Classic.

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