Hotel Rates Are Higher and So Are Their Costs

25.08.2023 - 13:23 / skift.com / Alan Joyce / Summer Travel / Rashaad Jorden / Jay Shabat / Seth Borko

Good morning from Skift. It’s Friday, June 16. Here’s what you need to know about the business of travel today.

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Travelers will likely notice that hotel room rates are up this summer travel season compared to last year, leading to charges that hotel owners are raising prices to take advantage of pent-up vacation demand. However, Senior Research Analyst Seth Borko argues that surging rates aren’t a case of price gouging.

Borko acknowledges that the average price of a U.S. hotel room rose 13 percent in May from the same month last year. But he reports that jump doesn’t account for inflation, adding the price of everything rose during the pandemic. Hotel owners in particular have seen the cost of items such fuel, food and laundry supplies increase. Borko notes inflation data suggests that most hotel owners are raising rates to keep pace with their surging costs. 

He also writes that if hotel owners aren’t making more profits from the increased rates, that’s not price gouging.  

Next, more travel brands are turning to artificial intelligence tools to help users make bookings, with many companies believing the growing technology will help them operate more efficiently. But Travel Technology Reporter Justin Dawes writes not all of those booking tools will be successful.

Dawes notes most companies want a virtual travel agent that can make bookings based on customers’ highly personalized preferences. Vacation rental listing platform HomeToGo is one company planning to release an AI booking tool. But Dawes writes it’s uncertain how small companies with limited data can compete against larger, wealthier rivals. He adds that the platforms that succeed will likely need to solve a unique problem or create a recognizable brand, feats many companies won’t be able to do. 

Finally, Australia’s flag carrier Qantas has resumed flights to New York City for the first time in more than three years. It’s another sign of airlines returning to normal after the pandemic, writes Jay Shabat, senior analyst at Airline Weekly, a Skift publication. 

Shabat reports that Qantas is initially flying to JFK Airport from Australia via Auckland, New Zealand three times a week. The company will increase that number up to four in October, a month that coincides with the start of Australia and New Zealand’s peak summer tourist season. Qantas views Auckland stopover as an interim measure until it receives a new set of ultra-long-range Airbus jets, possibly in 2025.

CEO Alan Joyce said the company has seen enormous demand for the flights since they went on sale last year.