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Market Report

San Diego Hospitality Market Report

Midyear 2023

Downtown Room Demand Reaches Pre-Pandemic Level;
Portion of Tourists Willing to Splurge

Upscale segments shine. San Diego’s hotel sector recorded higher occupancy across the 12-month period ending in June than all but three major U.S. markets — New York, Las Vegas and Orlando. Increases in local air passenger volumes and record tourist spending supported this performance, with data indicating travelers are willing to allocate upward of $200 per night despite inflation and potential budget tightening. This dynamic is aiding upscale and upper upscale hotels. During the recent yearlong span, upscale occupancy reached nearly 80 percent, with the upper upscale segment noting the largest occupancy gain among chain scales at 820 basis points. Hotels operating in these classes have faced minimal supply-side pressure of late and this trend will extend over the near term, as a limited number of rooms are slated for second half delivery. 
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