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It's Official: You Paid More for a Hotel Room in 2006

We ran a few different stories throughout the year about hotel rates going up noticeably, especially in markets with ongoing high occupancy, such as New York, D.C, and Boston. Turns out the rates really did go up--all over the U.S.

Smith Travel Research, a number-crunching company that gets quoted in just about every story about the lodging industry, has released its year-end 2006 report. Last year was a banner year for hotels, not such a great year for frugal consumers.

Average room rate increased 7.0 percent to $97.31 and revenue per available room (RevPAR) --- the combination of occupancy and average room rate and a key industry productivity measure --- gained 7.5 percent to $61.69. Industry room supply increased 0.6 percent in 2006 while demand (roomnights sold) gained 1.1 percent. Full year 2006 room revenue increased 8.1 percent to $100 billion.

So despite all the building going on, demand is still increasing faster than supply. The silver lining in the report was that things leveled off a bit in the 4th quarter and occupancy was down a little. So either the price increases have hit the limit of what guests will bear, or it was just a temporary breather.

We think it's interesting that the average rate across the U.S. is less than $100 though. No matter what the aspirational travel magazines would have you believe, far more people are spending a night at Holiday Inn Express and Microtel than they are at the Crowne Plaza and Ritz-Carlton. Maybe it's that free wi-fi...

[Photo: Zoofy the Jinx]

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