Brian Jewell (00:06.13)
Hey there everybody. Welcome to Gather and Go, the podcast that helps you plan, promote and lead better trips. I'm Brian Jewell. I am your host. am feeling a little smarter than usual today. And when you hear the conversation with our very smart guest, Jan Freytag, I think you will understand why.

I hope you are having a great smart day as well and appreciate you being with us. As always, my promise to you today is that I'm going to do everything I can to make this investment of your time worth your while. Now, if you don't know my featured guest, Jan Freytag, he is a hotel analytics expert at the CoStar Group. And in today's featured conversation, he's going to help us understand why hotel prices feel so high right now.

He's going to share some surprising ways that demand trends are shaping the hotel economy. And he's going to give you some ideas for how you can find hotel deals for your tour groups. This is a really smart and insightful conversation. can't wait for you to hear it. Before we get there though, let's start with some travel news you may have missed.

Travel companies in the US and Europe are shutting down. Now you likely heard about ultra low-cost carrier Spirit Airlines shutting down over the weekend here in the US. And while this might be the highest profile travel company to close recently, it's not the only one. Numerous prominent travel companies in Europe were forced to shut down in recent months, including two British companies, Great Little Escapes and Jetline.

as well as Swedish tour operator Migs Travel and French cruise company Expedis Exploration. Now a Boston-based company called Go Play Sports Tours has recently closed, leaving some customers in a lurch, including the University of Dallas basketball team, which had made two payments of $30,000 each for travel to compete in a basketball tournament in the United Kingdom.

Brian Jewell (02:20.694)
Additionally, two travel agencies in Canada have recently been closed by regulators after customers complained of being swindled on airline tickets and hotel bookings. Several of the companies involved in recent closings blamed increased cost resulting from the war in Iran. Some industry analysts expect to see more travel companies shut down if the conflict isn't resolved soon.

Well, before we move on, I want to take a minute and share just a little bit of news from us. If you are new to group travel, or if you just want to get better at running a travel group, running a travel organization, running a travel company, I have a great content series to tell you about that you are going to love. It's called Group Travel Essentials, and we've been producing it, I don't know, a year, maybe a year and a half or so. This is a series of articles that comes out

twice a month online. And it is full of great, easy to read articles on really practical topics. You're going to find topics like how to keep your trips running on time, how to build customer loyalty, maybe how you can deal with difficult passengers during your tours, and even how to go about planning your first trip abroad.

These are just a few of the dozens of articles that you can find right now on our website at group travel leader.com slash essentials. And don't worry, I will link to that in the show notes to make it easy for you to find. If you go there, you'll be able to browse through our archive of dozens and dozens of essentials articles while you're there reading them. If you find them helpful, let me encourage you to sign up for our newsletter there on the site. When you do that,

you will get the latest edition of Group Travel Essentials in your inbox every two weeks. As I said before, this is really helpful content. It's really easy to read. It's kind of in bite-sized chunks for you. And I'll be honest too, these emails, they just look great. Our art department has done a fantastic job in putting these emails together. So they are a pleasure to look at. They're fun to read, and they're going to make you better at what you do. You can find them today.

Brian Jewell (04:39.956)
absolutely free at group travel leader.com slash essentials. Well, now it's just about time for us to get into our featured conversation with Jan Freitag. As we do that, let me remind you, if you are the kind of person that likes to watch podcast interviews, well, you can see Jan and me having this discussion on our YouTube channel. That's right. You can just go over to YouTube and search for gather and go. It'll pop up right there.

I'm also going to embed the video of this conversation in the show notes for this episode so you can watch there. And after we finish that featured conversation, I hope you will stick around here because we're gonna do a wrap up of some of the most important things that Jan had to say. And then after that wrap up, I wanna take a few minutes and kind of give you my honest thoughts about travel company closings and whether there is a right way

to handle those difficult situations. I think that's content that everyone in our industry needs to take a minute and hear. We will be right back with Jan Freytag.

Brian Jewell (06:00.206)
Hi, everybody. My guest today is a hospitality data analyst with extensive experience in the American accommodations market. He's the national director of hospitality analytics for the Coast Art Group, where he studies and comments on the trends that shape the country's hotel industry. He's a sought after public speaker and is frequently quoted in media outlets such as The Wall Street Journal, The New York Times and Bloomberg. Jan Freitag, welcome to the podcast.

Jan Freitag (06:27.832)
Thanks so much for having me, Brian.

Brian Jewell (06:29.812)
I'm really excited to have you here today. I'm going to ask you questions that I think a lot of travel planners are asking themselves every time they go to price out hotels for their trips, namely, why do hotels feel so expensive right now? What can you tell us about that?

Jan Freitag (06:47.672)
Well, they may feel expensive. The reality is the price increases in the hotel industry have actually not kept track with the inflation rate. So when you go back to 2019, you see that today's rates are roughly 22 % higher than they were then, which may sound like a lot. But CPI, the consumer price index, went up 25%. So in what economists call real terms,

Room rates today are actually cheaper than they were pre-pandemic. Now, that may not feel like that to you. Why am I mentioning this? I'm mentioning this because that means a lot of owners are under a lot of pressure because expenses, of course, are up, maybe at the level of CPI, maybe higher if you think about insurance or labor costs. So owners are in this interesting

squeeze where the top line isn't growing very much, expenses are growing quite quickly, and that then means their margins are pressed. And that's probably part of the conversation that you as a travel planner are hearing when you try to book a hotel.

Brian Jewell (07:57.218)
Yeah. So I think a lot of people in our minds, have the idea of a hotel owner, maybe like from the old monopoly game. You know, if you remember monopoly, if you, if you actually built a hotel on your property, that meant you were doing very well. you know, you're, on your way to winning. today's hotel owner maybe isn't just rolling in cash. sounds like.

Jan Freitag (08:17.582)
Correct, and I think there is maybe a little bit of a misperception also because we, a lot of times when you read in the news, in the general news media, New York Times or USA Today or whatever, you know, they're mentioning, oh wow, look at this room rates, $1,000 now, or New York City has rooms that sell for $1,500. And everybody looks at the uber, uber luxury, you know, what we call ultra luxury room rates. And you can see them in Condé Nast Travel and Travel and Leisure Magazine.

all these super duper high end properties that are indeed charging four digit room rates. And yes, those room rates have grown much faster than the level of inflation. But for you or me, our regular standard full service hotel or so, or limited service hotel, that's really not the case.

Brian Jewell (09:05.55)
Yeah, interesting. Now I know I as a consumer was, I was really feeling the inflation pinch. I don't 2022 around that range. That's when it's all everybody could talk about. don't notice it as much in my daily purchases, you know, in 25 and 26, but it feels to me like hotel rooms have still gone up in the past couple of years. So is it a situation where hotels are trying to catch up with the inflation that happened two and three years ago?

Jan Freitag (09:37.24)
I mean, maybe, but again, the cost structure for hotels has not come down or is still increasing often faster than the level of inflation. And I appreciate that you're saying, look, for me as a consumer, my inflation rate may have come down. News flash, there's a war in the Middle East and oil prices are going up and oil is permeating the American economy. We can see this in almost everything. This hasn't hit us yet.

So I can only expect that costs are going to continue to go up. And what that means then is that owners will continue to focus on the top line in order to outpace the cost increases that they're facing.

Brian Jewell (10:18.23)
Yeah. So let's dig in a little bit to those pressures that owners are feeling. You mentioned labor. You mentioned, you know, obviously fuel is going to filter down into everything. What are the major drivers that are putting that much pressure on their operating expenses?

Jan Freitag (10:34.572)
Yeah, so certainly first and foremost, right, we're in the service industry. So people are our most expensive line item. And that's not going to change. We are not going to have AI make our beds. Now, is it possible that we will have some savings on the back end because AI can route the telephone call to the right department or because you can text some AI agent to get you another towel? Sure. know, but.

You still want somebody to check you in and out. Or maybe if you don't want that, you want technology that allows that, which is also expensive to implement. But you certainly still need waiters, waitstaff, people in housekeeping, people in the back of the house that do the actual service work and the service delivery work. And that is expensive. We have a New York City union labor contract that's up for negotiation right now.

When I talk to people in the acquisitions and dispositions field, they're all saying, well, pencil's down in New York because we are not sure what the new labor contracts in New York City are going to be like. What is that increase for the housekeeping wage, for the wait staff wage? And before we know that, we're not going to underwrite a deal. So all eyes on New York City because

The asterisk to that conversation is, wow, the conversations are ongoing. And also, is it possible that we will see a labor strike in front of the World Cup? Nobody wants that. Nobody hopes for that. But is it possible? Sure. So that's going to be interesting to watch. We have other large union markets, Chicago, Boston, Hawaii, that are also getting closer to renegotiating their contract. And that then will likely mean higher labor increases.

Certainly number one if you're in a coastal area or in Colorado or in California You contend either with storms or with wildfires, right? either too much water or too little water and Luckily we've our hurricane season last year was actually very muted, but that is probably not going to be the rule That's more the exception. So we fully expect You know stronger hurricane season stronger wind events stronger fire events happening in the future that will drive

Jan Freitag (12:54.122)
insurance costs up, especially in the coastal areas. And then one other thing that is not as interesting or important to the operations, but very important to the owners is tax increases. So in a lot of downtown properties, because people aren't in the office anymore, a lot of office buildings lost a lot of value, which depleted the tax base. And so now cities are saying, where can I get my taxes back? And so they're going to

owners, to hotel owners and say, it looks like you're doing well. You know, we want to increase your taxes. So those are things that are definitely on the operator's mind. That doesn't impact your negotiations today or tomorrow, but just know that that is on the directors of sales mind, on the general manager's mind as they go into these negotiations.

Brian Jewell (13:42.956)
Yeah, that's fascinating. So it's a whole mix of things. not, it's no one policy. There's not a lever that we could magically flip that would change the situation. I hear you saying, yeah. Talk to me about the labor force specifically that is coming in from other countries. You know, early this year we saw a lot of immigration action from the Trump administration. You know, maybe that is not as intense as it was. Are you getting any kind of sense that,

immigration enforcement might be causing disruption in the hotel labor force.

Jan Freitag (14:17.944)
Yeah, I think it causes disruption a couple of different ways. One is just that people are very much on edge, right? And that if you have a family member who may be here undocumented or whose documents aren't quite in order, are you then going to go to work, you know, worrying that you may get picked up and you may not be able to make it home? if your papers are certainly in order, you know, are you saying, well,

Maybe, you know, this isn't, I'm not telling my friends and family, hey, you know, this is really the country of opportunity. You know, I think there's a lot of thinking from the outside looking here saying, maybe I don't want to come to the United States. We have F1 and J1 visas. Those visas get easily depleted. I know that a lot of hoteliers are using seasonal workers just because they're just not American, they're not enough Americans. They're not enough workers in those seasonal markets like.

Colorado ski areas or the Florida Keys, you know, it's just really, really hard to attract people for just, you know, four or five months of the year. So we historically have relied on having people coming in from, you know, from Europe or from Latin or South America for a very specific period of time. But those visa processes are taking longer now. And oftentimes they're also not as the yielding as much visas as we used to get to. So

All that means, the bottom line of this means hoteliers have to pay more for their wages to attract staff. And that then hits the bottom line.

Brian Jewell (15:51.916)
Yeah. All right. So you do a fair amount of forecasting. I know you have crunched a lot of numbers and kind of put out some ideas about what 2026 is looking like so far, what it might look like, you know, for the rest of the year and end of the future. Tell us what you are forecasting for hotel prices this year. Are they going to continue to rise? Do you see any leveling off? What should people plan on?

Jan Freitag (16:14.51)
I mean, so for the nation, we're proposing that room rates are going to grow 1%. Okay. 1%, you know, which is well below the level of inflation that's predicted to be what, two and a half percent right now, but that may obviously go up. Now, your mileage may vary, right? That is that 1 % is the average for every hotel. And of course, it's going to be a little higher in the larger markets. It's going to be a lot higher in the luxury end of the market.

market. It's going to be a lot higher for citywide convention nights like a Tuesday night or Wednesday night. If Chicago's convention center is fully booked, that means a lot of hotels in that general area will be able to drive their rates up more than that for that specific period of time. That may or may not be translating to a higher room rate increase for the year, but certainly I'm telling you 1 % for the year for every hotel, but it's a case by case.

number, especially for the meeting planners that are looking for larger venues.

Brian Jewell (17:19.404)
Yeah, that's very good intelligence. Let's talk about the demand side for a little bit. First of all, do you believe that the changes in demand could affect the pricing situation or is it just completely being controlled by supply and pricing on the supply side?

Jan Freitag (17:37.09)
No, mean, demand plays a huge role, If you're asking me, you know, can you get me a cheaper rate in Nashville, Tennessee, where I'm based? And I'm like, yeah, just book it Sunday night. And you're like, well, I don't want to come Sunday night. I want to come Tuesday night. And I'm like, well, Tuesday night is a higher demand night. So obviously, rumors are higher on Tuesday, Wednesday versus on Sunday. So demand has everything to do with it now.

we are seeing in the larger top 25 markets and specifically in markets like Nashville, Miami, Denver, Phoenix, Dallas, huge influx of new rooms. And that then takes the pressure a little bit away, puts pressure on hoteliers, takes pressure a little bit away from meeting planners because you have more options, right? And you can say, well, on Tuesday night, I was really looking for this rate. Can you match that? Because I have a couple of other hotels that can.

So that's where the negotiations come in. But there are certainly still a lot of other markets, secondary, tertiary markets, where there is not a lot of new room supply. And there, the hotel stock is what the hotel stock is. And as demand fluctuates, so will the room.

Brian Jewell (18:46.326)
Yeah. So putting yourself again in the shoes of that ordinary American traveler, you know, they're, they're not booking a meeting for, a thousand rooms, but they're looking to book, you know, a vacation for their family, or maybe they're doing 10 rooms for a group of friends. are you seeing any evidence that that ordinary American traveler has reached some kind of ceiling in what they are willing to pay for a hotel or are they pretty much just tracking with, with what rates are doing?

Jan Freitag (19:14.446)
I mean, it's, you know, the American consumer, you know, has this idea of life liberty and the pursuit of travel. know, Americans will always travel. And the question is, will they take that additional weekend trip? You know, if everything gets more expensive, will they do a summer vacation? Yes. Will they do spring break? Yes. Will they do fall break? Yes. But, you know, will they do this long weekend that had Valentine's Day and President's Day all wrapped into one? It was an amazing weekend because Valentine fell on a Saturday.

which always helps the industry. And some may have said, maybe I'm not going to feel that. I'm not going to have that additional trip with a hotel stay. I may go out to a nice restaurant. That weekend, by the way, was very strong. But we have more helpful weekends where a national holiday falls on a Friday in the fourth quarter of this year. And we're watching this very, very closely as everything gets more expensive. Now.

People certainly can trade, right? If you asked me today, should I fly somewhere for a quick one hour flight getaway, or should I drive to the same destination, it's like a four hour, five hour drive, and I'm looking at the TSA lines that are happening today, and I'm saying, you know what? Maybe it would take you as long standing in this TSA line and having a one hour flight than just driving. And when you drive, you're in your own command. you control.

when you're leaving, when you're going. So that's going to be super interesting to watch. Let's hope that DHS gets funded, that TSA gets funded, that those long lines are rapidly shortening as people, as TSA agents go back to work. Today, the trade-off between flight and drive is, I think, tilted a little bit more on the drive side. But then, of course, you have higher gas prices.

Brian Jewell (21:07.701)
Exactly.

Jan Freitag (21:08.526)
Hitting the pump and I heard you know, the California numbers are just truly eye watering what they're charging They had a pump so that you know, the American leisure consumer will still get away They may just not spend as much or what we hope in the hotel industry is that they still get away still take the stay But then make other choices like on the food and beverage side. We're not sitting down. We're doing drive-thru You know, or we're not maybe staying four nights. We're staying two nights. So

That's what I think the American leisure traveler will do. They will trade, but I think they will ultimately still travel.

Brian Jewell (21:44.662)
Yeah, interesting. Now you mentioned that luxury is going to continue growing in every indication that you see. Why is it that luxury right now is just on this rocket ship ride into stratospheric prices? What is it about luxury or the luxury buyer that they seem to have endless cash to spend? Contrary to the rest of us.

Jan Freitag (22:07.202)
Yeah, there is this concept of the K-shaped economy that economists use, right? If you think about the K, there's an arm pointing up and a leg pointing down. And that arm pointing up, that is fueled by the large stock market gains. If you were exposed to the stock market after COVID, you've certainly either realized or not realized a lot of gains.

You own your own real estate, you feel pretty wealthy. There's this idea of the wealth effect that the wealthier you feel, the more money you spend. And if you're on the upper income level, if you're in part of that upper income level, you don't need another car or another watch or another handbag. You you want to more experiences. so luxury hoteliers are leaning into that, providing more experiences in the property, out of property, through their food and beverage and their

charging for it because clearly the American high-end leisure customer or the international high-end leisure customer is very willing to pay for it. So we don't foresee that changing. There really doesn't seem to be a ceiling on room rate growth on the high end and certainly not on the very, very high.

Brian Jewell (23:23.55)
That's fascinating. So we've heard a lot in the past six to nine months about Canada, Canadians changing their travel habits, not wanting them to come to the U.S. for a variety of reasons. What are you seeing in the data about that? Is it as bad as we hear anecdotally? And is it having any impact on room rates?

Jan Freitag (23:45.762)
Yeah, so we're using two data sets that are not ours from CoStar. One is Statistics Canada has great data about travel crossings, and clearly those have deteriorated markedly. And then the American Government Department of Commerce puts out the I-92 APIS data set. Super wonky, but a super cool data set that shows you where people are flying to and from American airports.

And in both data sets, basically tell the same story, right? There is a rapid deterioration in Canadian inbound. And when we look at the Canadian data, right, because we have that, we have global data, so we also have access to the Canadian data. And it's been just super interesting to see. After April 1 of last year, when the tariffs were announced, there was an immediate flip to Canadians saying, we buy Canadian, we stay Canadian.

The Canadian hotel industry has done tremendously well. Last year, their ref par grew by, call that, 4.5%, 5 % or so. They came out this year in January and February. Again, ref par up very, very strong. That is, by the way, in contrast to revenue per available room, which is the number that we used to track the industry's health in the US last year, was minus 0.3%. And in Canada, it was over 4%.

So as the Canadians stayed home, they drove demand, and that then gave Canadian hotel use pricing power. And then anecdotally, when we talk to operators in Florida, in Arizona, in Nevada, and we're asking them, how's it going? They're saying, well, we don't see the Canadians. The US is now flyover country. The Canadians just go straight to Mexico or straight to the Caribbean.

Brian Jewell (25:33.868)
Yeah, so it's sunbelt destinations that are maybe hurting the most from that trend.

Jan Freitag (25:39.362)
Yeah, that and the immediate states at the northern Canadian border, those border crossings with drive to demand where people would stay maybe spend a longer weekend and do some shopping, that also has deteriorated.

Brian Jewell (25:52.334)
Yeah. Yeah. Fascinating. So a lot of our listeners are professional travel planners. They're maybe travel agents or they have their own tour companies where they package travel into products. And I'm wondering if you can kind of take some of your insight and give them some advice on how they can deal with the room rates that we're seeing right now. Are there things they can do to keep that in check? If they, you know, they have a target rooms need to be, you know, 25 % of my overall expense on a tour.

How can they make sure they don't blow that out and end up pricing their product too high?

Jan Freitag (26:27.65)
Yeah, so flexibility is key, right? Communication, open communication with your hotel partners is key. Every hotel has neat periods all the time, right? But if you walk in and say, I'm not flexible, here are my dates, my dates are what my dates are, then hoteliers might not be able to accommodate you or say, sure, you can have those rooms, but here's the rate that you don't like, you know? But if you're saying, look, we're putting together an itinerary with thinking,

We want to Philadelphia and Boston and New York, but we're kind of flexible on our dates. What works for you? And yeah, does that sometimes imply you need a Sunday night check-in? Yeah, that could happen. But there are probably also weeks that are not quite as strong where you can then say, we can help you out. We can fill your needs if you give us a little bit better room rate. So I think communication is key.

Brian Jewell (27:23.158)
Yeah. So it sounds like you're saying, you know, instead of picking your travel dates and then going to the marketplace and see what kind of rates you can get, maybe go to the marketplace first, find out when the optimal time is, and then build your trip around what the hotels are quoting you.

Jan Freitag (27:39.724)
Yeah, or saying, look, I know I have interest from people to come over from another country or from another state in June. So swear in June, what would work for you? What would work for me? Let's hash this out. And nothing is going to be perfect, right? But maybe this gives you a little bit more flexibility in your pricing.

Brian Jewell (28:02.478)
Yeah, absolutely. Well, if it's if it saves 5 % or 10 % on hotel costs, then it's a change worth making. For sure. So what about people who have to build their packages well in advance? There are, you know, tour companies right now who are putting together their final pricing for 2027, even 2028. So any idea how they should price that product in light of what you're forecasting room rates are going to do in the next 18 months?

Jan Freitag (28:29.58)
Again, I would just look in the market and say, hey, is there a brand new hotel that doesn't have a base yet? They might be a little bit more interested. We're not seeing a whole lot of new construction, but we're certainly seeing some. A lot of it are limited service hotels, but those brand new limited service hotels might actually be a better value for your customers than a property that's 40 years old and was renovated pre-COVID.

You know, and the owners don't have the wherewithal, the financial wherewithal to do the renovation today. Some of the newer prototypes and some of the newer limited service hotels are just, I mean, they're super nice, you know, and everything you need, nothing you don't, breakfast is included, you know, and it could be an interesting alternative. So, so I would not be, um, always so focused on a specific brand or on a specific hotel type, but I would just look at how old a property is and maybe there's something in there.

that makes it attractive to you and they may be able to give you an attractive price.

Brian Jewell (29:31.564)
Yeah. I'm glad you mentioned renovation and the renovation cycle because I have a sense that that kind of got disrupted during COVID. know, at a certain point, you know, there was some kind of rhythm every, you know, four or five, seven years, a hotel would, would renovate to one extent or another. What happened during the pandemic and is it kind of the Wild West now or are hotels finding their way back to that regular renovation cycle?

Jan Freitag (29:58.35)
So what happened was that in 2020, March of 2020, April 2020, room demand went to zero for all intents and purposes. And Odell owners had no income and they still had to make their mortgage payment, right? They laid off or furloughed most of their staff, but the banks were like, well, you still owe me your mortgage payment, but ha ha, good thing.

Brian Jewell (30:08.546)
Right.

Jan Freitag (30:27.072)
You have something called a reserve for replacement, which is money you put aside for renovations for the seven year cycle, seven year soft good, 10 year hard good renovations, normally the cycle for properties. We, we allow you, we, the bank allow you dear owner to take that money and give that to us as interest payment. And the owners were like, great. And the banks were like, great. But then of course, everything gets a year older and a year older and year older. And now.

the properties that were in 2019, maybe five years into that cycle, they were supposed to be renovated in 2022. That didn't happen because there was no money in the Reserve for Replacement Fund. So now, 2026, we have more money in the Reserve for Replacement Fund, now we're, whatever, seven, 10 years apart from the last renovation, and hotels really need it. And now the brands are saying, hey,

you really need to put some money into this property or we are no longer allowing you to fly our flag. And some owners are saying, you know what, I'm out. I'm selling, I'm done. If there's a change in ownership, a PIP, property improvement plan, which is basically a renovation kicks in immediately. That's part of the change in ownership. The brands put their foot down and say, hey, dear owner, you have to put in more money now. Now that takes a little bit of time.

And also, who knows what a bathroom set costs these days because we have these tariffs, which were then deemed illegal, which then you had another 10 % tariff on it. So I'm talking to people in the procurement business and they're like, Jan, we're making our best guess effort at figuring out how much things are costing from Vietnam and from China and from Indonesia, but we're not 100 % sure either.

Figuring that out is super hard for the owner, but just know that yes, this is on everybody's minds. On the owner's mind, it's on the brand's mind, it's on the customer's mind, they want newly renovated properties. And some owners have the wherewithal and they continue to be up in that cycle. So I talked about looking for new hotels in the markets where you want to go to. The other thing is to figure, to ask the properties that you're interested in. Okay, so tell me about your innovation.

Jan Freitag (32:52.034)
When was the last time your rooms were in your public spaces? And also, by the way, if I want to come to you in August of next year, are you planning a renovation of stuff next year? Because I don't want to be in that hotel when people are jackhammering at 730 AM. So just heads up, yes, a lot of hotels are seeing that renovation cycle. So you as a planner just need to ask that question.

Brian Jewell (33:16.108)
Yeah. Are the hotels that have been renovated able to command a higher room rate or does that not really enter the picture?

Jan Freitag (33:25.23)
I mean, that's why owners do it, right? Because they can be the new kid on the block. And they're saying, look, we're providing a better value. But so that's definitely part of the underwriting why you would do a renovation. so that's normally part of the picture. But again, it's not higher rates across all nights. There are need periods where that may not come to pass, and you may be able to participate.

and stay in a very, very nice new-ish hotel, renovated hotel, but the room rate increases are different because you're helping the hotel out.

Brian Jewell (34:00.354)
Yeah. So I know you focus a lot on the U S I wonder what you could tell us about hotels abroad or are similar things happening there or could the American consumer find much more bang for their buck by going to a foreign destination and getting a great hotel at a bargain price.

Jan Freitag (34:21.998)
Bargain price is a strong word. the dollar has deteriorated since the beginning of last year. So it is now more expensive to go abroad. That said, there are certain things that are still relatively less expensive. The spring break just happened here on Mason, Tennessee. We went out to Colorado skiing, but we talked to people who said, no, no, we went to the Alps. We went to France.

You know, because including an economy airfare ticket, having that ski experience there is basically the same price as going to Colorado. And by the way, the upgrade ski is much cooler. And I've definitely heard of people going skiing in Japan, you know, because the expenses there on the mountain are a lot less. So I think you have to price out the whole trip, you know, and figure out.

How does airfare fit into it now that airfare is a lot more expensive than it was literally 20 days ago, 30 days ago? That factors into it. The dollar is not as strong as it used to be. So all of this plays into it, exchange rate, and then also what do you pay for food and beverage on the ground? How do you get around? Like all of those costs need to be wrapped into it. it's hard for me to say like blanket, yes, you should all go abroad or no, you should all stay here.

you know, because it's really like a case by case basis. But are there ways to go abroad on a, you know, air lingus or Iceland air cheaper carrier, you know, that gets you to Europe, maybe with a stopover in an economy class seat with a limited service hotel on the other side that is equal or less than a trip to the United States where you do everything full service? Sure. That's possible.

Brian Jewell (36:14.358)
Yeah, yeah, fascinating. Well, Jan, what is the best way for people to follow your research, learn more about CoStar Group, be more involved in what you're working on?

Jan Freitag (36:25.326)
Yeah, so I am what they call prolific. Part of my KPIs is I have to publish. So I'm not a professor where it's publish or perish, but I have to write a lot. And I'm making a lot of my thought pieces and data pieces available on LinkedIn. So it certainly hit me up on LinkedIn. And then if you're really into hotel data, it turns out we have a podcast. And it's called Tell Me More, a hospitality data podcast.

What's in it says it on the box on the outside. It's Hotel Data Podcast. So my colleague Isaac Colazo and myself get together once a month where we dissect the monthly STR costar data. It takes about 35, 45 minutes or so. We riff on the data, talk about what drives the current performance metrics. So if you're into data, that's your go-to shot. We call it the Not a Lot of Hair, but a Lot of Good Data Podcast.

Brian Jewell (37:22.35)
Well, if you're kind of a nerd like Jan and me, go check out that podcast for sure. You will, you will enjoy it. Now, before I let you go, we have some fun questions we ask everybody and these are no pressure. So you can just answer off the top of your head. When you book travel, are you booking window seats or aisle seats?

Jan Freitag (37:40.246)
Window always.

Brian Jewell (37:41.848)
Yeah, just like the view.

Jan Freitag (37:44.718)
Say again please.

Brian Jewell (37:45.582)
You just love the view?

Jan Freitag (37:48.43)
Yeah, and I don't want to get up if somebody else has to get up, so.

Brian Jewell (37:52.446)
Yeah, there's that as well for sure. So what's something you pack in your carry-on that you wouldn't travel without?

Jan Freitag (38:01.134)
Too many power cables. I am so worried of power loss. I am just like, I have, I don't even have that many devices with me, but I have like two X the power cables I need.

Brian Jewell (38:12.214)
Yeah. And you know, I'm the same way. And I find myself with cables that don't even fit a device I own anymore. You know, it's the wrong, the wrong attachment, but I still have it for some reason, for sure. So if you had a free airline pass in a week with nothing else to do, where would you go?

Jan Freitag (38:29.902)
Probably back to Asia, know, would probably bounce around between Hong Kong and Bangkok and Singapore and you know, I'm more of a city guy than like a beach guy. So I would enjoy the bustling, hustling, bustling metros in the Apex.

Brian Jewell (38:44.494)
Yeah, no, that sounds amazing. And the last question is, what is one thing you have seen or done on the road that you wish you could go back and experience again with somebody you love?

Jan Freitag (38:58.124)
Well, I have been very fortunate in the court with my wife. We're now married for 12 years, but when we were dating, I had this string of speaking engagements in these spectacular, beautiful locations. And I was like, Hey, would you like to go to, you know, the Biltmore resort or, you know, the cloisters? And she's like, sure. And I'm like, you just have to excuse me Monday morning for half an hour. got to do this thing. And she's like,

What do you do? Is there a job? What is this thing where you get like fly to these resorts? So we're not traveling like this anymore, but I was very lucky that at the time it wowed her. And so, you know, I married way up. So, you know, there are, you know, just a lot more city destinations that I haven't been to with my wife. So I look forward to doing more travel.

Brian Jewell (39:48.494)
Yeah, well, I hope you guys get the chance to do that and maybe one day she'll understand what you do. But I think as long as you're taking her to great hotels, you're not going to get too much pushback, right? Everybody wins. Everybody wins. All right. Well, Jan, thanks so much for joining us. This has been a real treat.

Jan Freitag (40:04.438)
My pleasure, Brian. Thank you very much for having me.

Brian Jewell (40:14.382)
I sure hope you enjoyed that conversation with Jan Freytag. And I hope you see what I meant at the beginning of the episode. Jan is just the kind of guy that makes you feel smarter after you spend some time with him. Now I want to go back through some of the key things that Jan said to make sure you don't miss some of these really important takeaways that stuck out to me. Early on in the conversation, when I asked Jan why our hotel price is so high, he kind of pushed back a little bit.

He said, they may feel expensive. The reality is price increases in the hotel industry have actually not kept track with the inflation rate. So when you go back to 2019, you see that today's rates are roughly 22 % higher than they were then, which may sound like a lot, but CPI, the consumer price index went up 25%. So in what economists call real terms, room rates today are actually cheaper than they were pre pandemic.

He went on to say, a lot of owners are under a lot of pressure because expenses of course are up. So owners are in this interesting squeeze where the top line isn't growing very much. Expenses are growing quite quickly and that means their margins are pressed. Yon really opened my eyes to a travel constituency that I had not thought a lot of before, which is hotel owners. And if you think about things from their point of view, well,

They're struggling with all the same things we're struggling with. They're having a devil of a time trying to stay staffed up. Their expenses are going up. Their suppliers are raising rates. It's getting more and more and more expensive to operate hotels. And so there may be a way of thinking about this in which we realize those hotel owners have absorbed at least some of those price increases. And maybe we need to be grateful that they haven't raised prices more than they have.

Now, when I asked John about how demand impacts hotel pricing, he said something that I found really interesting. He said, we're seeing in the larger top 25 markets and specifically in markets like Nashville, Miami, Denver, Phoenix, and Dallas, a huge influx of new rooms. And that then takes the pressure off a little bit, puts pressure on hoteliers and takes pressure a little bit away from planners because you have more options. He went on to say, there are certainly still a lot of other markets.

Brian Jewell (42:41.27)
secondary and tertiary markets where there's not a lot of new room supply. And there, the hotel stock is what the hotel stock is. As demand fluctuates, so will the room rate. Again, this kind of changed my perspective on some issues regarding demand and hotel prices in destinations around the country. For a few years now, I've been looking at the very places that Jan mentioned, Nashville, Denver, Miami,

similar places like that and saying these room rates are simply out of control and you may be better off going to a smaller destination that can be just as much fun and cost less. I'm not saying that that has completely changed, but I think Jan makes an interesting point because rates in those places are so high. There's a lot of development happening there, which means more hotels being built, more rooms being built. And that could actually start to

moderate hotel pricing in those places. On the other hand, places that are not as popular may not be seeing as much hotel development. And so you may see those smaller destinations start to trend upward in hotel price because there's just not competition coming into that hotel market. Now, does that mean a place like Nashville is soon going to be as affordable as my hometown of Lexington, Kentucky, or that that my hometown is going to be as expensive as Nashville?

I don't know, but it's an interesting trend to keep your eyes on. And it just reinforces that we need to kind of constantly be checking the market because things change. And what you assumed was true about pricing last year may not end up being true about pricing next year. And finally, when I asked Jan for some tips on how group travel planners can find hotel deals when they are trying to arrange trips well in advance, he said,

I would just look in the market and say, hey, is there a brand new hotel that doesn't have a base yet? They might be a little bit more interested. He said, we're not seeing a whole lot of new construction, but we're certainly seeing some. A lot of it is limited service hotels, but those brand new limited service hotels might actually be a better value for your customers than a property that's 40 years old and was renovated pre-COVID. He went on to say, I would not

Brian Jewell (45:06.122)
always be so focused on a specific brand or a specific hotel type, but I would just look at how old a property is and maybe there's something in there. I think this is so insightful. It really resonated with an experience I had, I don't know, a month or so ago on a trip. I had to book a single night at a hotel in a destination I've been to many times before. And I ended up booking a full service property with a

nationally known flag, you would recognize it if I told you what it was that offered a really attractive rate online. When I got to the hotel, boy, what a bummer it was. First of all, this hotel did not meet the national chain's brand standards in any way. I was shocked that they still had the brand flag. It was old, it was tired, it had clearly not been renovated in a long time.

just not a place I wanted to be. I was thankful that I only had to spend one night there. The next night of the trip, I was with a group. We were in a limited service hotel, the next town over, but it was a hotel that I can't remember if it was either a new hotel or a newly renovated hotel, but it looked wonderful. It felt wonderful on the inside. it offered fewer amenities and fewer services, but I enjoyed that stay a whole lot more simply because the hotel was newer and

the staff there seem to take some pride in it and seem to care. So all that to say, think Jan is exactly right. When you're looking for great deals for your groups, it might be a better idea to look for places that are newly renovated, even if they don't carry the prestigious flag, because you are likely to have a better stay and you might end up with a better value at a limited service, newly renovated property than a full service, but old.

and tired property. Lots of great insight there from Jan Freytag.

Brian Jewell (47:06.828)
Well, we talked earlier in the episode about numerous travel companies, tour agencies, tour operations, travel agencies, of course, Spirit Airlines and other companies that have closed in recent weeks and months. You know, it's always sad when a travel company closes. Sometimes though it is a necessary ending. And this is the part of the show where I usually limit my comments to about 60 seconds on a topic and

play a cheeky little timer and kind of have fun with making big statements. I'm not going to do that today because instead I want to just tell you a personal story about a necessary ending of an organization that I really cared about and maybe pass along some lessons that could be helpful to anybody who has to make hard decisions about their travel business. So I hope you will just indulge me for a few minutes while I share this story and then

connect it to the work we do in travel. For a lot of the last decade or so, I was deeply, deeply involved with a nonprofit here in Lexington that I really, really loved. I did some volunteer work there, eventually was asked to be part of the board and the oversight of the organization. And it was just as close to my heart as an organization could ever be. But about three years ago,

the leadership and I started to see that some things just weren't working out our way. I'm not going to get into the details, but it became obvious that some mistakes had been made. Some key decisions had gone the wrong way and the future did not look good for this organization. Now there was still money in the bank and there were still donations coming in.

But the rest of the board and I looked at the circumstances. We looked at the leadership picture. We looked at where things were trending and we knew from what we saw that the situation was unsustainable. So even though there was money in the bank, even though there were still people donating, we made the very difficult decision to close that organization. And there were people involved with the organization that wanted us to stay open. Certainly people on staff. was

Brian Jewell (49:28.076)
very painful to have to say goodbye to them and turn them loose to find, you know, other work. There were also other people involved with the organization that wanted to see it stay open. But what the board and I really believe to our core is that if we had stayed open, we would have soon ended up in a position where we weren't able to fulfill our commitments. we would have just been taking donor funds.

knowing that we weren't going to be able to do the things the donors gave us the funds to do. In other words, we would have been operating in bad faith and we just couldn't go there in good conscience. So it was painful, but I really believe we made the right decision. And I believe we did it the right way. And here's the key. We did it the right way because we made the decision while there was still enough time and enough money to do it responsibly.

And I bring this up because a lot of tour companies and other travel vendors that close unfortunately don't do it in a responsible way. They end up like that tour company taking $60,000 from a college basketball team and basically leaving them high and dry. And well, to me, that is just unconscionable. Now you're not operating a nonprofit obviously, but people do trust you with their hard earned money.

the way they trust nonprofits that they donate to. And in some instances, people are giving you money that they have worked and saved for years to be able to afford a trip they have been dreaming about for a long, long time. So if things get tough financially for your travel organization, I believe your primary responsibility is to those people who have trusted you with their money

trusted you with their dreams. What does this mean? It means when you see that things might not be working out the way you hoped, you probably should stop taking people's money. In fact, I don't think you should take a dime of anyone's money if you have the slightest inkling that you may not be able to fulfill the trip they're paying you for. This might also mean canceling some trips that aren't going to break even and issuing refunds, even if that's going to be disappointing to some people.

Brian Jewell (51:49.226)
It also likely means making the call on a failing business before you run out of cash. Now there is a sense among some entrepreneurs that you should keep fighting to stay open until the very last penny is gone and sometimes longer. I don't subscribe to that point of view. Number one, because it takes time and cash to wind down a business and close it well. But more than that,

I really believe that when you're taking money that is attached to people's dreams, you have a special obligation to protect those funds and the dreams they represent. The last thing you want to do as a steward of people's dreams is take their money, misspend it, and then leave them high and dry. So here's my message to you. If the time ever comes where you have to make a difficult decision about your travel business, and I hope it doesn't,

I hope you enjoy massive success and wonderful adventures and great financial rewards, but we know that that's not the reality all of the time for all of the people. So if the time comes where you have to make that difficult decision, I want to encourage you to do the right thing and responsibly close with dignity, take care of your people and then walk away.

with your head held high. And maybe you didn't want it to end. Maybe it wasn't the ending to the story you thought you were writing, but ending well, caring for your people, ending with dignity. That is an ending you can be proud of. And everyone you work with in the travel industry will thank you for it. Well, I'm going to get off my soap box now.

But I do want to let you know that whether you are thriving or struggling, we are always eager to hear from you here at Gather and Go. You can send me your thoughts, questions, or the checks you just bounced to podcast at group travel leader.com. I read every email that comes into that address. I really do love hearing from you. Hey, you never know your thoughts and ideas might just be the inspiration for a future episode.

Brian Jewell (54:16.37)
of Gather and Go. While you're in the mood to give me some feedback, would you do me a big favor? Would you go to your favorite podcast playing app? If you haven't already subscribed to the show, then do it there. While you're there, if you would give us a rating and leave us a review, that would be super helpful. I'm so thankful to everyone who has done that so far. My thanks as well to Jan Freytag for joining me today. On the next episode, we're going to have a great conversation with Stephen Ekstrom of Learn Tourism.

Who's going to tell us all about how continuing education can revolutionize your career in travel. You won't want to miss that. Until then though, remember this at the end of the day, we are all on this trip together. So let's make it a good one. See you next time on gather and go.

Brian Jewell (55:12.696)
Gather and Go is hosted and executive produced by me, Brian Jewell. Our publisher is Mack Lacey. Our creative team includes Danya Simmons, Ashley Ricks, and Rachel Crick. Our sales team is Talisa Reck and Ashley De Lucia. To advertise on the podcast, call Talisa at 859-253-0455. Gather and Go is a production of the Group Travel Leader. For more information on our podcast, magazines, and events, visit us online at grouptravelleader.com.