Hotels in Drivable Destinations Are Benefitting From Airline Industry Turbulence

Pent-up travel demand plus airline labor shortages plus rising fuel prices equals hotels in drivable destinations getting a boost, according to Moody’s Analytics.

A pricey and chaotic summer full of flight cancellations and airlines across the world scaling back their schedules has led to the continuation of the pandemic-induced trend of travelers opting to eschew airports altogether and vacation in destinations reachable by car. With the exception of Oahu, Hawaii, vacation spots that are accessible by car from major metro areas (such as those surrounding New York City, Massachusetts, Rhode Island, and New Jersey) have seen an increase in occupancy rates and revenue per available room (RevPAR) in the past month.

RevPAR and Occupancy Growth July 2022 

MarketRevPAR GrowthOccupancy Growth
Myrtle Beach19.5%7.1%
San Diego17.8%1.5%
Virginia Beach13.6%2.0%
Daytona Beach10.3%3.2%
Fort Myers7.8%7.2%
[Source: Moody’s Analytics CRE]

Even though COVID-19 restrictions have long lifted in many areas, hotel recovery is fairly uneven. Hotels in less accessible destinations where the bulk of their guests fly in aren’t seeing as much of an uptick in occupancy levels. Lowered occupancy does not necessarily ring the death knell for the hotel industry as higher room rates can make up for the lack of demand. But with a recession brewing in the background, the model of fewer occupants and more expensive rooms may not be very sustainable for long.

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