Beyond just travel, oil prices also have a role to play in the operational expenses of hotels. Lower prices can bring down utility bills and transportation costs on goods and services and, depending on how long oil prices stay low, properties
may see this impact their bottom line. “There’s certainly going to be an operational benefit,†says PKF Hospitality Research President Mark Woodworth. “The ultimate benefit is mitigated quite meaningfully by the fact that 45 to 50 percent of hotel expenses are labor related.â€
The 50 percent drop in oil prices during the second half of 2014 has put plenty of cash into consumers’ wallets and that could mean good things for the lodging industry this year. Crude oil is selling for $47.64 per barrel today compared to over $90 a year ago. And while prices have started to stabilize a bit, there’s still a chance for them to decrease even further due to the glut of crude and the expectations of weak global growth pulling down the market.
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