Research Update: Puerto Rico’s lodging revenue hits $154M despite uneven hotel and rental performance
South & Central See Higher Demand
According to the latest reports from Smith Travel Research (STR) and AirDNA, Puerto Rico lodging demand in May showed mixed results. Over 300,000 rental nights were booked last month, marking an 11% year-over-year increase with an average rate of $219 (up 9%). Conversely, hotel room demand, despite reaching nearly 340,000, saw a 3% decline, with the average rate at $259 (down 5%).
As of June 18th, AirDNA's May rental data shows that the regions with the highest growth in booked rental nights were Culebra (+33%), the South Region (+15%), and the Central Region (+11%). The San Juan area accounted for 32% of total May rental revenue, while the East Region contributed 25%. In the western part of the Island, rental nights booked grew by 9%, capturing 23% of the total rental revenue.
Hotel occupancy rates saw the most significant shifts in the "Regional Luxury and Upper Upscale" class and the "San Juan Upscale & Upper Mid Class," both experiencing a decrease of 7.6 percentage points. Total hotel supply nights in May increased by 1.5% compared to the same month last year
Despite May’s mixed results, strong early-year performance keeps year-to-date figures ahead of last year. As of May, hotel average rates have risen to $338 (up 4%), while rental nights are selling at a two-year high of $226 (up 2%).
May Lodging Revenue Hits Record High
Strong rental demand, along with higher rental rates, pushed May lodging revenue estimates to record levels, totaling $154 million, a 3% year-over-year increase. Lodging revenue generated from hotels was $88 million, an 8% decrease, while revenue from the rental market reached $66.3 million, a year-over-year increase of 21%.
Year-to-date, the lodging industry has generated $995 million in revenue, a 11% increase from a year ago and 23% more than in 2023.
Because hotel rates are typically managed by dedicated revenue teams, there are typically wider shifts across seasonality compared to rental rates, which tend to vary less throughout the year. As of May, hotel revenue accounted for 62% of the total revenue share this year, producing upwards of $600 million (+5%), with rentals accounting for the remaining 38% or $380 million (+21%.)
Rental Pacing Remains Positive
Discover Puerto Rico monitors the industry’s hotel reservation booking pace for several reasons, including forecasting demand, adjusting marketing strategies, and managing resource allocations.
According to TravelClick, the hotel reservation booking pace as of June 8th is tracking June occupancy at 72%, which is -5% behind last year, while July is also pacing slightly behind (-3%). Economic, political, weather, and social instability can create weariness in leisure travelers to book too far in the future. This will make booking windows shorter or closer to the actual travel dates. Pacing for June and July has improved slightly in the last two weeks as we continue to monitor hotel occupancy data.
Despite slower July numbers, overall occupancy for Q3 is pacing 11% ahead of last year, thanks to strong August and September group bookings that continue impacting positively year-over-year pacing metrics. The last quarter of the year is also pacing well, thanks to confirmed group business early in the quarter, although December is lagging in all segments for now.
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