Cloudbeds urges independent hoteliers to consider new ways to hedge inflation in 2024

Cloudbeds, the hospitality management platform powering more reservations and happier guests for independent lodging businesses around the globe, urged independent hoteliers to look beyond raising their average daily rates (ADR) as a hedge against high inflation.

The guidance comes from Cloudbeds’ 2024 State of Independent Lodging Report, which revealed lodging businesses can no longer rely on ADR increases as the main driver of hotel performance. Instead, they must proactively adopt additional strategies to offset the rising operational costs.

Despite many hotels already streamlining their staffing models and trimming housekeeping services, Cloudbeds emphasizes that independent hoteliers can explore further avenues to reduce costs and increase pricing, particularly in food and beverage services, parking, ancillary fees, and non-refundable rates.

Sebastien Leitner, VP of Partnerships at Cloudbeds, said: “While hotels have experienced record ADRs, it hasn’t been enough to offset a hike in operating expenses and global inflation. Hoteliers face a critical question going forward: if travelers are becoming increasingly price-sensitive, how much longer can pricing be pushed to offset rising costs? ADR is no longer an inflation hedge. Instead, we’ll see independent businesses turn towards streamlined operations that maximize profitability and delight guests.”

The technology provider highlighted that room rates surged by 20% in 2023 compared to their 2019 levels. However, amidst this increase, global inflation peaked at 8.7% in 2022 before declining slightly to 6.9% in 2023. Consequently, the rising operating expenses outpaced revenue growth for many independent hotels.

Cloudbeds’ findings are grounded in data from 10,000+ independent properties, encompassing boutique hotels and guest houses, B&Bs, and hotel groups in over 100 countries across North America, Latin America, Europe, and the Asia-Pacific region.