Economy and Midscale hotels hit a new revpar record for the month of January, outperforming 2019 levels by 24%, data from STR - a division of CoStar Group – has found.
Occupancies and rates at the budget end of the market surpassed pre-pandemic performance, largely driven by the cost of living crisis which has seen consumers opt for lower-priced hotels.
STR noted this focus on value for money bodes well for budget hotels as it predicted a “positive” and “strong” 2023 for the likes of Premier Inn and Travelodge, following on from outperformance in the second half of 2022
“Hotels at the lower end of the class spectrum are likely to continue having an advantageous position as value-for-money propositions become critical given the squeeze on discretionary consumer spend,” said Cristina Balekjian, director of Hospitality Analytics, UK, CoStar Group.
In January, Whitbread posted a 37% growth on accommodation sales for Q3 FY23 – the 13 weeks to 1 December 2022 - on pre-pandemic levels with further confidence on forward-bookings. For the first three weeks of January, Travelodge posted a total revenue increase of 35% on 2019.
STR noted that although inflationary pressures are set to continue, efficient operators are likely to be successful.