Reviving Travel Trends, Corporate Hotel Negotiations, Zoom's Office Return, and Exciting Flight Giveaways Highlight August's Industry Insights

Watch Gabriel Wacker discuss this week's industry trends

In this month's edition of Viciniti StaySmart Newsletter, we explore the various dynamics shaping the travel and corporate world. From the recovery of the extended stay hotel segment outpacing the overall industry to the fresh challenges faced by corporate travel managers in negotiating hotel rates, the landscape continues to evolve. Meanwhile, tech giant Zoom calls employees back to the office, mirroring a broader trend across tech companies. Lastly, travel enthusiasts have a chance to win free flights this August as Going.com celebrates its eighth anniversary with daily giveaways.

Dive into these engaging stories and more to stay abreast of the latest industry insights and trends.

?U.S. Rent Growth Slides Below 1%: Is Negative Territory Ahead?

Rent growth in the United States has continued to decline, dropping below 1% in the year ending July 2023. This marks only the second time since the Great Financial Crisis that the rate has dropped this low, and experts suggest that it might further drop into negative territory in the next couple of months. The Midwest and Northeast regions are performing better, unlike other parts of the country.

The downward trend is attributed to a multi-decade high in new supply, which is putting pressure on pricing rather than a demand issue. Year-over-year rent growth is now at 0.78%, with growth primarily seen in the Midwest and Northeast. West Coast markets are cooling even faster than the Sun Belt, with major metros like Los Angeles, Seattle, and San Jose showing negative growth. Despite these trends, the pace of rent growth's slowdown is expected to level off soon. Apartment operators are prioritizing occupancy, and national market-rate apartment occupancy is holding stable at 94.6%.

• What do you think is driving the rapid cooling in rent growth, and how could this trend affect renters and landlords in your area?
• Are you surprised by the performance of the Midwest and Northeast in contrast to other regions? What could be the reasons for their stability?
• Do you think the pace of rent growth's slowdown will level off soon, or is this the beginning of a more significant decline?
• What strategies should apartment operators adopt to navigate this high-supply environment? How might these trends shape the real estate market in the coming months?

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Extended Stay Hotels Outpace Overall Industry with 3.2% RevPAR Gain in Q2 2023

A mid-year 2023 report by The Highland Group shows that extended stay hotels in the US have seen a 3.2% increase in Revenue per Available Room (RevPAR) in Q2 2023, outperforming the 2.7% gain reported for the overall hotel industry. All three segments of extended stay hotels (economy, mid-price, and upscale) are recording record high room revenues for both the year to date and Q2 2023, translating to an overall 9% increase in revenues.

In Q2, RevPar reached $94.03, 113% of its 2019 value, ahead of the overall industry recovery. The upscale extended-stay hotels segment reported the largest Average Daily Rate (ADR) increase of 8.4%. Despite a 1.2% decline in total occupancy compared to last year, the extended stay industry maintains an 11 percentage point occupancy premium over all hotels. The number of rooms under construction remained consistent with last year, at 5% of rooms open, reflecting a drop from 8% in mid-year 2021. The report suggests that the low supply growth favors extended-stay hotels, but the performance of the overall industry will likely be a significant factor in the near-term metrics.

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Airfare Drops Provide Temporary Relief for Travelers, But Prices Expected to Rebound Soon

Domestic and international airfare prices are showing signs of cooling after a hot, crowded summer, according to data from the flight-booking app Hopper. Domestic round-trip airfare in the US dropped to an average of $257 in the last week of July, marking an 11% decrease from last year and 2019, and a 14% decrease from the roughly $300 paid over the Fourth of July weekend. International airfare has also fallen, with round-trip flights to Europe averaging $813, down from last year but still 7% higher than pre-pandemic levels.

This trend is due to typical seasonality, lower jet fuel prices, increased competition, and shifting travel preferences as more travelers opt for international getaways. However, travelers should take advantage of these lower fares while they can, as prices are expected to rise again as the holiday season approaches. Hopper forecasts that domestic airfare will average $267 in August and peak around $283 in late November and early December. The absence of competition from various low-cost carriers, which have not yet returned to pre-pandemic levels, is seen as a key component in achieving sustainable low prices in the future.

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Hoteliers Gain Upper Hand in Corporate Negotiations Amid Recovery, Says Global Business Travel Association

?A survey by the GBTA | Global Business Travel Association indicates that hoteliers are now in a more advantageous position in corporate negotiations compared to the pre-pandemic period. According to the survey of corporate travel managers in the U.S., Canada, and Europe, 55% are struggling to find favorable hotel rates through the request-for-proposals process, versus 39% who are facing challenges with airline pricing. European hotels appear to be particularly costly, with 75% of Europe-based buyers finding it difficult to secure favorable rates. Factors contributing to this change include inflation, the end of "buyer-friendly" deals, tougher negotiating tactics by hotels, and a decreased reliance on business travel as leisure demand increases. The GBTA expects this trend to continue for at least the next two years.

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Zoom Enforces "Structured Hybrid Approach," Calling Employees Back to Office Two Days a Week

Zoom, a prominent video-conferencing service that thrived during the pandemic, has announced a "structured hybrid approach" that requires employees living near an office to be onsite two days a week. The company believes that this approach will help them innovate and support their global customers more effectively. This move aligns with a broader trend in the tech industry, with companies like Google, Amazon, and Salesforce also bringing employees back to the office. The decision follows a period of adjustment for Zoom, which cut about 15% of its staff and saw executives reduce their salaries after a rapid growth phase during the pandemic. Even the White House is encouraging more in-office attendance, indicating a shift in work culture as the pandemic wanes.

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Going.com Celebrates Eighth Anniversary with Free Flight Giveaways Every Weekday in August

Travel site Going , formerly known as Scott's Cheap Flights , is celebrating its eighth anniversary by giving away free flights every weekday in August. The giveaways will be conducted on Instagram , and participants must be members of Going.com or create a free account to enter. To participate, travelers need to log into their account, find a deal they want to book, "like" the corresponding post on Going.com's Instagram page, and leave a comment with the desired deal. Winners will be announced the following day in Going's Instagram stories. Alongside the giveaway, the company is also offering discounts on annual and multi-year memberships, with up to 50 percent off on various membership tiers.

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