Research Update - August 15, 2024

Thursday, August 15, 2024 Research

In July, lodging revenues reached $183 million, reflecting a 3% increase from the previous year. The rental market saw a 9% increase in revenues, reaching $84 million. Hotel revenue was $99 million, lower than expected due to a slowdown in demand caused by fewer groups and business travelers this month.

Year-to-date lodging revenues totaled $1.28 billion, an 8% rise from last year. Hotel revenue contributed $790 million, or 62% of the total revenue share.

According to its Executive Director, Airbnb’s second-quarter earnings indicated a slowdown in overall growth in several key areas, with signs of decreasing demand from U.S. guests. However, AirDNA reports show that Puerto Rico continues to experience significant year-to-date rental revenue growth, reaching $491 million, a 13% increase compared to last year.

Read the Research Update in Spanish: Research Update - August 15, 2024

According to San Juan Cruise Port reports, over 932,000 cruise ship passengers have arrived at the San Juan docks this year through July. While the local cruise market hasn’t recovered from the impact caused by the Pandemic, year-to-date results recall a steady recovery, now reaching 88% of the 2019 record year. Refurbishment plans for the San Juan cruise piers, including plans to modernize the port experience, upgrades to terminal buildings, the walkway in front of the bay, and other infrastructure repairs, are scheduled to begin soon.

According to Tourism Economics, overall cruise travel demand is elevated with total passenger days up 7% through June. Sailings from the U.S. to all regions registered 2% higher in the first six months of 2024 vs. the first half of 2019.

In July, the estimated lodging performance showed a total demand growth of 2.6% compared to the previous year. However, the demand for hotel room nights has remained static since Q2. In contrast, AirDNA estimates that booked rental listing nights have grown by 10% during the same period.

The hotel scenario was partly due to a reduced group base and a decline in business transient travel. Despite these challenges, hotels have maintained record average rates of $273, a 1.2% increase from last year.

Year-to-date, total lodging demand has reached 712,000 room nights, a 7% increase compared to last year. Hotels account for 56% of the lodging night market at an average rate of $310. While hotel demand has increased by 2% compared to last year, rental nights have surged by 13% year-to-date, averaging $243 per night.

Contrary to the local industry, U.S. hotel demand in the U.S. began with a slow start to 2024, but rebounded in Q2 with 1.4% growth over 2023 per STR. According to Tourism Economics and STR, higher-end hotels continue to outperform economy and midscale properties, reflecting the effects of inflation and higher interest rates on household budgets. Year-to-date U.S. lodging demand through June shows flat growth of 0.1% compared to last year, with the Mid-Atlantic and Northeast regions performing best

GDP growth accelerated to 2.8% in the second quarter. This is a good sign for the economy, signaling strength and reinforcing Tourism Economics’ early 2024 forecast for a soft landing. Consumer spending rose at a solid pace in June, and it is expected this will continue over the second half of 2024 as real income growth continues against a backdrop of strong household balance sheets, even amid a modestly higher U.S. unemployment rate.

Puerto Rico continues to outperform the U.S. average on leisure and hospitality job growth. June estimates from the Bureau of Labor Statistics report 99,900 leisure and hospitality jobs, a year-over-year increase of 8% compared to the U.S. average of 2.5%.