The hospitality landscape is witnessing divergent trends, as Phoenix's hotel sector experienced a slowdown in 2024, contrasting with the U.S. hotel industry's acceleration. According to CoStar’s 2024 year-end data, the U.S. hotel market set new records for average daily rate and revenue per available room, although Phoenix did not follow this national upward trajectory, as reported by ABC15 News.
In Phoenix, the year concluded with an average hotel occupancy of 67.9%, a subtle decline from the previous year's figure of 68.3%. The U.S., meanwhile, maintained a steady occupancy rate at 63%, unchanged from 2023, yet neither Phoenix nor the national market has surpassed their pre-pandemic occupancy highs of 70.4% and 65.8%, respectively. Phoenix's average daily rate fell to $173.45, marking a 0.8% decrease from 2023, while the average U.S. daily rate saw a modest year-over-year increase of 1.7% to $158.67, as per information detailed by Phoenix Business Journal.
Further dissecting the Phoenix market trends, the city's hotel revenue per available room descended by 1.38% year-over-year, settling at $117.79. Conversely, the national figure went up by 1.75% to $99.94. Although the U.S. reached its highest average daily rate and revenue per available room ever in 2024 the growth pace was the slowest since the decreases experienced in 2020. Interestingly, despite similar setbacks, Phoenix had previously seen more rapid growth post-pandemic in comparison to the broader U.S. market.
Before the disruptions caused by COVID-19, the U.S. and Phoenix's average daily rates were virtually identical — $131.56 and $131.99, respectively. By 2024, Phoenix’s rate was over 31% higher than in 2019 while the U.S. rate was up by approximately 20%. The cooldown in Phoenix's key hotel industry metrics can largely be ascribed to the introduction of new hotels, inflation, and other macroeconomic factors. The market remained relatively flat for the year, with certain properties enjoying successes, and others facing more pronounced challenges. Phoenix anticipates a flux of hotel rooms with construction in progress, including significant projects like those of Desert Diamond Casino in the West Valley that could influence rates and occupancy in 2025.
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