Tuscaloosa’s 2024 Hotel Revenue Down $8.5 Million As Demand Dips

Tuscaloosa's tourism economy was down in 2024, with demand for hotels dropping 7 percent from 2023 numbers and hotel revenue dipping by about $8.5 million year-over-year.

Many factors contributed to the lower numbers last year, but a growing short-term rental market may have partially offset them, experience economy experts say this year should be better, and beyond 2025 there is even more cause for optimism.

Kelsey Rush is the executive director of Visit Tuscaloosa, a tourism organization that aims to draw more visitors and their disposable income into West Alabama. Each month, Visit Tuscaloosa releases its STR Report, showing occupant and revenue data from county hotels and more.

In December, occupancy of the county's more than 4,200 hotel rooms was at 40 percent, which was a 3.7 percent drop from December 2023, but not one that shocked industry leaders.

"Last year - in 2023 - we did have the Super 7 and the Republican Presidential Debate here in December," Rush said, and their absence predictably meant less demand. "I think the hotel market wasn't necessarily as shocked by December's data - I think the bigger conversation is the collective year of 2024."

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December's STR Report also included year-end data, where hotel metrics were down across the board. Average occupancy was 53.2 percent last year, down from 56.6 percent in 2023 and 57.7 percent in 2022.

The average daily rate for hotel rooms was more or less even on the year, dipping from $128.76 a night to $128.30.

The starkest contrast was in annual revenue, though - hotels brought more than $114 million to Tuscaloosa County in 2023, and that number dropped to $105.7 million last year - a 7.5 percent decrease that will cut into lodging tax revenue for local governments.

Rush said that can be partly attributed to a decrease in corporate travel and tighter wallets for visitors.

"2022 and 2023 were really good years because a lot of people still had stimulus money, they had a little more expendable income to travel with but even so, what we're seeing from a leisure standpoint is the market is actually still doing pretty good," Rush told the Thread. "What we've noticed this year and confirmed with feedback from our hotels is that trends are really down in the corporate travel space. They know they can meet online now for some meetings, or maybe they're in between projects - we get a lot of construction workers who spend time in hotels here while they're on different projects in the market - or inflation has played a role in their travel budgets. All that's to say, the corporate travel market is probably where we saw the biggest decline."

Rush said the hotel industry has exploded in Tuscaloosa County since the Embassy Suites was built and opened in 2015 with half a dozen more downtown hotels coming online since then and more in the works for the downtown area, around Northport recreation projects and elsewhere.

"In the last decade, we've added a lot of hotels to the market. Between the Hotel Capstone and the seven or so hotels open now downtown, you've added about 1,000 hotel rooms just in this area in the last decade. So the big question is how are we doing on inventory?" Rush said. "I think if we are going to continue to add hotels, we need to be very strategic about what hotels they are, what kind of hotels and where they're going. I don't want to say, 'No, we don't need any more hotels,' but we are in a good place."

It's no secret that Alabama football has long been the primary driver of tourism to the Tuscaloosa area, and though Kalen DeBoer had a first year that fans of most programs would be thrilled about, tourism leaders are also aware how rare and special the Nick Saban era was for the region.

The Tide is hardly fading from relevance, but Rush said if tourism is going to grow in Tuscaloosa, we will need other offerings to bring visitors here, too.

"We've got a good home football season in 2025, but what can we do to not always just be sustained on those 7 football weekends a year?" Rush said. "It all depends on what new demand drivers we are building or creating in the market to bring in more visitors. Think of the Saban Center, River Run Park and Northport Shore, some of the things that are happening on Lake Tuscaloosa - all of that will help us generate more visitors coming to Tuscaloosa County."

Those megaprojects are set to transform the area, multimillion-dollar investments meant to draw thousands of visitors annually, and Rush said if the vision for those attractions is fully realized, it could offset some of the losses hotels saw in '24.

"If we continue to invest in those kind of developments, we may be OK. 2025 will be another interesting year for our hotel market," Rush said. "But I really do believe when 2026 and 2027 come around, with River Run Park and the Saban Center open, I am hopeful those developments will not only recoup the demand we've lost but build on it and bring more people here than ever before."

Those visitor dollars matter, Rush said - both lodging tax from hotels and short-term rentals and sales tax generated when tourists buy food or merchandise goes into the General Fund budgets of local governments.

"That means it helps pay for our police, our fire protection, it helps pave our roads, it pays city salaries, it helps fund our local agencies," Rush said. "Every dollar generated by a visitor is really enhancing the quality of life for our residents."

There is also promising news in the short-term rental market, which Visit Tuscaloosa also monitors through a third-party partnership

"I'm really interested in the short-term rental market. Unlike hotels, there's not a way to really communicate with our short-term rental owners so I don't get to speak to them collectively but data shows more listings are available, more revenue is there and growing," Rush said. "It's not apples-to-apples and we're trying to figure out if our short-term rental revenue grew enough to offset that decline we had on the hotel side."

For more coverage of the issue as more 2025 data is collected and made available, stay connected to the Tuscaloosa Thread.