An airliner takes off from Boston's Logan Airport. The Boston Convention and Exhibition Center business is expected to generate 575,000 hotel room night bookings in 2025. iStock photo
As Massachusetts prepares to welcome conventioneers and tourists to a busy schedule of upcoming events, record hotel room rates are becoming the new normal.
Inflationary pressures on operating costs are driving the increases, industry analysts say. With little new hotel construction set to provide a safety valve, room rates have nowhere to go but up.
“Rates for college graduations are going to be in the nosebleed seats,” said Bruce Ford, director of global business development for Lodging Econometrics, a Portsmouth, New Hampshire-based hospitality industry consultant. “You’re talking $600 a night to stay at the Copley Marriott, and they are going to get it.”
Industry data shows strong demand for rooms in most segments of the market, at a time when urban hotel development remains stalled.
Braintree-based Pinnacle Advisory Group forecasts average room rates in the Boston-Cambridge market are set to rise another 2.9 percent in 2025. Revenues per available room, a measure of hotels’ profitability, will increase 3.9 percent, Pinnacle forecasts.
Inflationary Cost Pressures on Margins
Offsetting the eye-watering room rates are rising expenses that have sliced into operators’ profit margins in many U.S. markets, said Isaac Collazo, senior director of analytics at hospitality researchers STR.
“It’s been labor to food costs and everything in between,” Collazo said.
Boston has outperformed many other metros, with average daily rates increasing 3.5 percent in 2024, outpacing the year’s inflation rate of 2.9 percent. Nationally, room rates rose 1.7 percent over the same period.
The Boston-Cambridge market ended 2024 with an occupancy rate of 77.2 percent, up 1.2 percent from 2023, according to data provided by Pinnacle Advisory Group. Average daily rates rose 3.1 percent to $301.
Revenues per available room, a widely accepted measure of a hotel’s profitability, rose 4.3 percent to $232.62, Pinnacle Advisory Group data indicates.
Boston’s RevPAR ranks third in the U.S., according to hotel researchers HVS, trailing only Manhattan and Oahu, Hawaii.
Steve Adams
High-Profile Events Drive Future Demand
Boston’s profile as a travel destination is set to gain altitude in the next two years, driven by rising convention business and special events.
The Boston Convention and Exhibition Center is hosting 49 events this year generating an estimated 575,000 room nights, up from 48 events and 548,000 room bookings in 2024. That increase will be offset by an approximately 100,000 room night decrease tied to the temporary closure of the Hynes Convention Center in Back Bay for renovations from June through August, according to Pinnacle.
The Massachusetts Office of Travel and Tourism is promoting a series of events across the state commemorating the 250th anniversary of the American Revolution. And Foxboro Stadium is hosting seven World Cup matches in June and July 2026, promising an infusion of international visitors.
“Boston is one of the strongest markets in the country right now in operating performance,” said Alan Suzuki, managing director of capital markets at JLL. “We were a late-cycle recovery market, but there will continue to be temperate growth in the Boston market.”
