In regards to inflation, new data from the United States government is showing a further increase in consumer prices across the board. That being said, the numbers in 2023 are showing a significant impact on businesses in the hospitality industry. Whether you are a hospitality business owner or not, continue reading to learn more about how inflation is affecting consumer travel and the hospitality industry as a whole.
What Kind Of Inflation Rates Are We Talking About?
According to the Bureau of Labor Statistics’ Consumer Price Index, “The all items index increased 6.4 percent for the 12 months ending January.” This is reported to be the smallest increase since the 12-month period ending October 2021.
More than anything, consumers are seeing a distinct rise in prices of gasoline, food, energy, and shelter.
Gasoline prices have seen a 2.4% increase in the month of January, with an overall increase of 1.5% over the last 12 months.
Overall food prices have seen a .5% increase in the month of January, with an overall increase of 10.1% over the last 12 months.
Energy prices have seen a 2% increase in the month of January, with an overall increase of 8.7% over the last 12 months.
Being one of the more dominant factors, shelter prices have seen a .7% increase in the month of January, with an overall increase of 7.9% over the last 12 months. To put this in perspective, without food and energy, this accounted for roughly 60% of the total increase in the all items index.
Note: All data shown was gathered from the Bureau of Labor Statistics’ Consumer Price Index.
Inflation’s Impact On The Hospitality Industry
With inflation shooting up since 2020, consumers are finding it harder to rationalize travel plans. Since the surge in COVID 19, people have been wanting to take a getaway now more than ever. However, inflation is causing them to have to reconsider these plans due to the average cost of living.
As such, the average consumer that is looking into travel plans is most likely looking for cheaper options. This means that they are much more willing to book a two-three star accommodation rather than a four-five star one.
What Should You Do?
So what are you supposed to do moving forward? With all this talk of inflation, it might be time to temporarily adjust your business’ packaging strategy.
Adding value to a consumer’s stay is a great way to help them justify their getaway. For example, including a FREE meal, night, or something extra with a guest’s stay will make them far more likely to consider booking. While this might cut into margins, it will certainly make for a more memorable getaway.
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