As occupancy stalls, parking drives hotel revenue growth

Parking rate increases are an effective way to increase revenue, and help offset inflationary pressures on operating expenses

With occupancy levels lagging during the post-COVID recovery and guest counts depressed, hotel owners and operators have had to look for alternative sources of revenue beyond the rental of guest rooms to make up for the income deficits. For some hotels in the U.S., parking has become a profitable source of revenue since COVID and helped fill in the revenue gap.

Key takeaways

• Office occupancy levels in major U.S. markets have just returned to the 50% level, providing urban hotel owners and operators an opportunity to lease multiple parking spots at nearby lots and garages at relatively low rates;
• Like guest rooms, hotel parking spaces are not subject to long-term leases. Therefore, hotel parking lots can utilize technology and dynamic pricing techniques to maximize revenue during different market conditions;
• Hotel guests do not typically choose a hotel based on the cost of parking. However, location is frequently cited as an important factor. If guests must drive to stay at the preferred location, then the hotel gains pricing leverage.

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