Gas Prices Rise, Hotel Demand Falls

The average price of gasoline has soared to a national average of $4 per gallon, the U.S. Energy Department announced this week. That's bad news not only for American motorists, but also for American hotels, according to Bjorn Hanson, a hospitality and leisure researcher for PricewaterhouseCoopers. Speaking in New York last week at the 30th annual New York University International Hospitality Industry Investment Conference, he reported that every 10 percent increase in gas prices is coupled with a 0.5 percent decline in hotel demand.

Even as it hurts demand, however, the economy isn't expected to impact hotel rates anytime soon, according to MeetingsNet, which reported on the conference. It cites Mark V. Lomanno, president of Hendersonville, Tenn.-based Smith Travel Research, who pointed out in a separate session that hotel room rates have not yet declined, despite high gas prices and the reduced availability of credit.

In fact, Lomanno said, for the first five months of 2008, revenue per available room (RevPAR) was at 2.6 percent in the United States; at the end of May, it was up 4.6 percent.

Helping, Lomanno added, is a new upward trend in weekday occupancy, which accounted for more than $24 billion in hotel revenue at the end of April, up from more than $23 billion a year earlier.