Travel is causing a lot of sticker shock right now—and not just when it comes to purchasing plane tickets.
“Room rates [at hotels] have increased rather drastically over the last 3 years,” said Jan Freitag, senior vice president of lodging insights for global hospitality and data company STR.
In May, average room rates at U.S. hotels were up 17% from pre-pandemic 2019, according to STR data analyzed by Frommer’s, and up 38% from the unusually low prices seen 2 years ago as travel began to rebound from the pandemic standstill.
The price surge is more dramatic in many popular European destinations. Compared to 2019, May’s average room rates were up 33% in London, 38% in Paris, and 22% in Amsterdam, STR data shows.
Freitag blames a combination of inflation and a still-unrelenting demand among Americans to travel.
“Hoteliers are saying, Look, everything is getting more expensive,” Freitag said. “And at the same time, the American traveler ... has realized that travel is a necessity.”
So much so, in fact, that travelers “remain willing to pay a premium” for certain amenities, according to a recent analysis from booking app Hopper.
That sentiment was echoed this spring by several major airline and hotel executives, even amid larger economic concerns.
“I think we still have a lot of pent-up demand,” Hilton president and CEO Chris Nassetta told investors in late April. “While people have a little less to spend, they’re spending more of it on experiences and less of it on things.”
If there’s hope for a reprieve for your wallet, it’s this: Like inflation, the sharp, upward trend for lodging prices has cooled a bit. Though U.S. hotel rates surged by more than 30% in May 2022 versus May 2021, the increase this May was a far more measured 5%.
Somewhat surprisingly, STR’s Freitag noted in a recent analysis that luxury U.S. hotels and resorts have even seen prices tick slightly downward for the first time since the earliest days of the pandemic, ending a streak that saw rates climb from an average of $182 in April 2020 to $492 in March 2023.
“We are going to continue to see room rates grow just below the level of inflation,” Freitag predicts—an expectation he and other experts say could continue even if the economy does enter a recession.
Still, hotel rates are undeniably elevated right now. Here’s some advice for saving on your next stay.
Be deliberate about when you book
While booking early is generally the best rule of thumb when it comes to flights, things aren't quite as simple when it comes to hotels.
If you're headed toward a popular year-round vacation destination with "warm weather, entertainment, and access to the outdoors," a 2023 Hopper report found that booking early is often your best bet.
In large cities, on the other hand, you may have better luck scoring a deal if you wait to book until the final weeks before your visit, the analysis revealed.
Online travel agency Expedia further notes that in some cases waiting until the last minute to book hotels can result in a lower rate, “as some hoteliers look to fill as many rooms as possible.”
Keep in mind that most major U.S. hotel companies’ "standard" rates don’t require prepayment. As long as you cancel at least a couple of days before your scheduled arrival, you’re likely not forfeiting any cash if you book a room but later find a better rate. You may be able to cancel the reservation and rebook elsewhere with no penalty. (Be sure to double-check all relevant cancellation policies in advance.)
Avoid peak periods
Take it from one of the industry’s top leaders.
“It’s sort of fundamental supply and demand,” Marriott CEO Anthony Capuano said during remarks this spring at American University in Washington, D.C. “If you want a less expensive rate, you should travel during periods of lower demand.”
To that end, if you can swing a fall trip instead of one during the peak summer months (but before Thanksgiving) you can often save on airfare and room rates.
Big city deals are available, depending on the night
The return of travel to big city centers has generally lagged behind other types of destinations such as beaches and resorts. A big reason for that: Traditional business travel has not fully returned, Freitag said.
Translation: City center hotels can’t reliably count on high-paying business travel customers, so those properties have to cater more to families and other leisure travelers.
That said, meetings and conventions have bounced back, as Hilton and Marriott executives noted in recent quarterly reports. “And that, of course, drives rates for those specific nights,” Freitag said.
But on nights when there aren’t big corporate events in town, you may be able to score a deal.
Balance price and flexibility
The pandemic made flexibility a requirement for travelers who needed assurance they could cancel plans and get a refund.
But slightly less uncertain times might make a prepaid reservation more attractive. With these types of rates, you prepay for your stay when booking the room (rather than after checking out), often at a discount.
Mind you, prepaying is not the best option for every traveler. You’re out the money if you end up needing to cancel. And, as we explained earlier, you’re locking yourself in. You can’t cancel and rebook for free if you later find a better rate.
But if your trip is set in stone—and, ideally, set to happen in the near future—and you find a price you love, prepaying can be a money-saving option worth exploring.
For example, a 5-night stay spanning the long Fourth of July weekend at the JW Marriott Miami comes to a total of $1,434 with the standard rate, which you'd pay the traditional way. After booking, you can cancel up to 2 days before arrival.
If you prepay in full, however, you’ll save 12%, or $181—but you won’t get that money back if you cancel more than a day after making the reservation.
Check for offers, discounts, and codes
Look for travel-related offers in your credit card or bank portal—there may be a good deal for a hotel you’re eyeing.
Here’s a current example in my American Express account: Spend $500 or more, get $100 back at Camelback Resort in Pennsylvania’s Pocono Mountains.
Other sources of discounts may include programs like AAA and AARP, for which discounted hotel rates often come as perks of membership. And, if you have a travel credit card or hotel elite status, be sure to take advantage of every property dining credit, free breakfast, and other money-saving benefit at your disposal.
Analyze the whole cost, not just the room rate
With so many hotels charging resort fees and the like (whether or not the properties are actual resorts and whether or not you use the amenities you’re charged for), you’ll want to make sure you factor in the total cost of a stay when comparing hotel prices.
Five nights at a $200-per-night hotel without a resort fee is better than 5 nights at a $190-per-night property that tacks on a $25 nightly fee.
Check back at the place you couldn’t afford last year
Though prices remain high, the upward trends have slowed a bit from last year.
That may open up opportunities for some travelers, depending on budget, destination, and dates, Freitag pointed out.
“If you’re a little more on the higher end, you may find properties that were maybe a little out of reach a year ago may be available to you this time around,” he said.