During the first months of the pandemic, American travelers changed their behavior, with many choosing to forego their annual trips for summer vacation. Those who ventured out often traveled by car to avoid airports and planes. As a result, the demand for highway hotels relative to total room demand in the United States has increased markedly. This category of hotels is defined as those near a freeway or major highway that cater primarily to transient travellers.
When the pandemic began to take hold in July 2019, an average of 9.2% of all occupied hotel rooms were classified as interstate properties. In July 2020, this percentage increased to around 11.9%. This is partly due to the slower decline in demand for hotel rooms on the highway. Demand for rooms was down 39% in July 2020 from a year earlier, but demand for interstate hotel rooms was down only 18%.
This speaks to the resilience of hotels in these locations. Operators benefited from the perceived security of hotels that allowed drivers to access their hotel rooms while avoiding long elevator rides or crowded lobbies. Some older interstate motels still offer open hallways and exterior access to rooms. And while those properties with so-called exterior hallways are quickly becoming obsolete, they were often the accommodation of choice early in the pandemic because they minimized exposure to staff and other guests.
As the immediate impact of the pandemic faded, highway hotels continued to be the lodging of choice for American travelers, even for short weekends. In July 2021, interstate properties posted performances that topped 2019 records. Operators posted weekend occupancy of 78.7%, two points higher than 2019 results. However, in July of this year, this record occupancy rate was not repeated and the weekend average fell to 73.3%.
The strong temporary performance also made properties in these locations more attractive to investors, and total interstate hotel sales topped 2019 results. However, the recent decline in occupancy is yet to be reflected. in commercial activity. Through July of this year, interstate hotel sales have already reached last year’s total, and based on projections, it is reasonable to assume that 2022’s total sales amount will be the highest. high for the past five years.
While interstate hotel occupancy is not expected to return to record levels seen at the height of the pandemic, the outlook for hotels near major highways continues to be positive as airfares continue to rise. and prices at the pump are moderating, making car trips more frequent. attractive to a large number of travellers. In addition, strong demand for freight is expected to keep the US trucking industry busy and fill roadside hotels. Additionally, the new appreciation for exploring nearby attractions and national and state parks is expected to continue to drive demand for interstate hotels.