Along with the increase in popularity of Los Cabos as a premier beach resort destination in Mexico has come the expected increase in hotel and resort room rates.
According to local tourism officials, the average room rate in Los Cabos was up more than $100 so far this year, with some resort rooms well over $500 or more per night during the peak spring travel season.
Rates on the Rise
According to a recent report from the Los Cabos Hotel Association (AHLC), the average room rate in Los Cabos during January was 23 percent higher than the hotel rates one year ago.
It was noted that one year ago, the overall demand for rooms was less due to the COVID-19 pandemic.
A traditional measure of profitability in the hotel industry, RevPAR, or revenue per available room, worked out to an average of $125 more during the month of January.
The room increases were more pronounced in the Los Cabos Tourist Corridor.
Increased Visitor Volume
The increase in hotel rates was expected as demand increased during the month of January. During January, more than 340,000 passengers used the Los Cabos International Airport. This was an increase of more than 34 percent over the year-ago passenger count.
Not all of the growth in passenger count came from international visitors. A large increase also came from domestic passengers, especially from Mexico City, Guadalajara, and Tijuana.
The main destination airports in the United States were Los Angeles, Dallas, and Phoenix.
The Deluxe Traveler
As Los Cabos repositions itself to attract more affluent luxury travelers, this trend of higher room rates for the best resorts is expected to continue.
Even hotels that were considered more mid-scale and affordable could see some changes. For example, hotel giant Marriott International recently got approval for the takeover of the City Express chain in Los Cabos.
An increase in amenities and acceptance of the Marriott Bonvoy program will most likely increase the room rates at these mid-range hotels in Los Cabos.
Post-COVID-19 Revenge Traveler
Travelers have been itching to get out and explore ever since the general lockdowns from the COVID-19 pandemic were lifted, and it was no longer a real hassle to travel internationally.
Dubbed “revenge travel” by some experts, tourists flocked to destinations around the world last summer, especially in Europe. The trend has already shown legs for this summer season as well.
The increase in demand from the “revenge travel” segment is expected to increase room rates in Los Cabos. This is especially the case because many of these travelers did not spend money on travel during the three years of lockdown and have plenty of money on hand for travel.
They have also been showing their preference for more luxury travel, including higher-end resort rooms and deluxe amenities.
Another reason for the increase in room rates is the shift in consumer preferences among younger visitors to more international and experiential travel.
The younger generation in the United States, which some have labeled the iGen, born after 2000, are not only more tech-savvy, but they are more globally aware and environmentally conscious. Both of these bode well for the future growth in tourist demand in Los Cabos.
However, the effect of the increase in interest among these travelers is expected to continue the room rate increase. However, these price-conscious travelers will be the first to balk at the higher rates.
The Value Traveler
What does this all mean for value travelers? Some travelers may simply find Los Cabos too expensive and shift their visit to a more affordable Mexican beach destination with lower room rates.
This trend is showing itself this year as more lower-end value travelers are heading to Rocky Point, also known as Puerto Peñasco.
Others will continue to travel to Los Cabos regardless of the room rates but may have less money to spend on tourist activities and dining. It may also lead to an increase in timeshare property purchases to avoid higher room rates.
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