WSJ Your Money Briefing - How to Score a $200 Hotel Room for Less Than That

Episode Date: September 30, 2024

Hotel room rates have skyrocketed in recent years, now averaging $200 or more in some of the nation’s largest cities. Wall Street Journal travel reporter Allison Pohle joins J.R. Whalen to discuss what travelers can do to save money without having to cancel their plans.  Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

OCI is the single platform for your infrastructure, database, application development, and AI needs. Do more and spend less like Uber, 8x8, and Databricks Mosaic. Take a free test drive of OCI at oracle.com slash wall street. Here's your money briefing for Monday, September 30th. I'm JR Whalen for The Wall Street Journal. How much are you willing to pay for a hotel room? $150? $170 a night? You better open your wallet a little wider.

In the nation's largest cities, hotels are charging an average of $200 or more. And that's making a lot of travelers do some number crunching. A lot more travelers are turning toward rewards and points for their stays, though of course they also say their points don't go as far as they used to. There are deals out there if you bundle your hotel stay with flights, but you need to be careful and read the fine print of those deals. Our travel reporter Alison Poley will join us after the break. recession risk. Exchanges on the market impact of AI. For the sharpest analysis on forces driving the markets and the economy, count on exchanges between the leading minds at

Goldman Sachs. New episodes every week. Listen now. The price of a hotel room has skyrocketed and in many cases $200 a night is the new norm. Wall Street Journal travel reporter Alison Poehle joins me. Alison, I'm old enough to remember getting a decent room for under $100. How much of hotel rates risen in the past several years? By the double digits. So there's a few different markets we can look at to show just how much they've gone up.

So pre-pandemic to now, Tampa and Phoenix, hotel rates have gone up 30%. Miami and New York City are up 21%. So across the board in major cities, hotel rates are up dramatically compared to where they were five years ago, of course. What's driven up those costs? And why is the five-year marker significant?

The five-year marker is significant because it's pre-pandemic to now. So 2019 is when we think of a healthy travel demand. There were tons of leisure travelers going around paying the rates that were available. But of course, we're a long way since then in terms of inflation. So that's one of the reasons that the costs are changing. So inflation has driven up the cost for operators and they have to pay a lot more

for electricity and maintenance and all the costs associated with running the hotel, not to mention labor. So they're paying their workers more as well. Those costs get passed on to the traveler, but of course there's also profit margins for these hotel companies and people are paying the rates. So as long as the demand is up, they are able to keep charging these amounts. These double-digit percentage increases, are we seeing these at all levels of hotels? No, we're not not so it's not evenly spread so with luxury hotels in particular they're able to charge the most. The highest paying

leisure traveler has been very resilient and has been able to stomach these higher rates. They're very motivated to take their trips in a way that people with less disposable income cannot be. So what we've seen is among the lowest tier hotels, their rates have been pretty flat over the past year and have even dropped a percentage point or two. You were with us on the show earlier this month discussing how companies, including hotel companies, are making fees more transparent in the listed price. And anybody who's checked into a hotel

knows that there are taxes and fees and such on the bill. Has the transparency of the fees helped people deal with the higher room rates? In some ways, yes, but when we're talking about the room rate itself, that's where we see a lot of these big increases, and then the taxes and fees are on top of that. So hotel taxes are a percentage of the total room rate and a lot of the fee transparency bills do not require taxes to be shown

in the total initial price that travelers see. So that does mean that on the checkout page they can be paying 10 to 15 percent of the room rate cost and the hotel companies are still in compliance by not showing that on the initial advertised screen. You spoke to travelers who are dealing with this steep increase in numbers. What's been their experience? So a lot of them are still very motivated to travel, but maybe they're changing their destination or they're staying for a shorter amount of time. So I spoke to one traveler who really wanted to go to Boston this fall, and she said she was shocked by how expensive the hotel room rates were.

So rather than spend four nights in Boston where she could not find anything decent for under $1,300 for that entire amount of time. She decided to switch her plans and take her son and her grandkids to Dollywood for one night. She's paying for two hotel rooms in that case, but she says she's able to get a lot more for her money than she was with the Boston trip. What can travelers do to make these higher hotel rates more manageable? So there are options out there. A lot more travelers are turning toward rewards and points for their stays, though of course they also say their points don't go as far as they used to. There are deals out there if you bundle your hotel stay with flights, but you need to be careful and read the fine print

of those deals just to make sure that you're able to cancel and you're getting a fair shake when it comes to the total price there. In general, there are some sites that will let you search for last minute hotel rooms where you can get Hotwire is an example where a lot of people will search for a last minute stay that a hotel has discounted because they do want to fill the room. Yeah, I want to ask about the hotel side of this. What are they doing to avoid losing customers because of the climbing rates? So especially at this lower end we see some change where hotel companies are

lowering their rate a little bit. Also, they're putting deals out there. So you might see a buy several nights, get one night free, or an automatic upgrade if you purchase a certain room, or additional food and beverage credits, where maybe not all hotels are able to lower the room rate, but they are able to entice travelers with other deals. What's the outlook for average room rates in the coming year? So analysts predict that room rates will increase slowly and steadily with the traditional rate of inflation, so about 2%,

meaning they will go up matching what we think of as traditional inflation, but not in these double-digit increases that we saw in recent years. And what could cause hotel companies to bring down the room rates? There would have to be a dramatic shift in behavior where people stop booking rooms and they stop traveling because they protest the rates. We have not seen that yet, especially because in the fall in particular a lot of business meetings and conferences are going on so hotels are full meaning they can stomach

some leisure travelers deciding not to travel but there would have to be a pretty dramatic change in behavior for the rates to change. That's WSJ Travel Reporter Allison Tolley and that's it for your money briefing. This episode was produced by Zoe Kulkin with Deputy Editor Chris Z Poley. And that's it for your money briefing. This episode was produced by Zoe Culkin with Deputy Editor Chris Zinsley. I'm JR Whalen for The Wall Street Journal. Thanks for listening. AI may be the most important new computer technology ever, but AI needs a lot of processing speed and that gets expensive fast. Upgrade to the next generation of the cloud, Oracle Cloud Infrastructure or OCI.

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