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Consumer Price Index
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Measuring Price Change in the CPI: Hotels and Motels
Lodging away from home is a component of the shelter index in the Consumer Price Index (CPI). It has two components: (1) Housing at school, excluding board, and (2) Other lodging away from home including hotels and motels (hereafter, referred to as other lodging away from home). The other lodging away from home index, which includes houses and apartments in the sharing economy, is published monthly at the U.S. city average level.
Item Definition
The other lodging away from home index includes short-term accommodations at hotels, motels, resorts, hostels, vacation rentals, and similar establishments. Long-term rentals (more than 6 months) or lodging available only to large groups, institutions, businesses, or employees are excluded from the index.
Relative Importance
The relative importance of an item category is its percent of the CPI weight as of December of the most recent year.
| Item | Relative importance |
|---|---|
|
Shelter |
36.191 |
|
Rent of primary residence |
7.671 |
|
Lodging away from home |
1.338 |
|
Housing at school, excluding board |
0.245 |
|
Other lodging away from home including hotels and motels |
1.093 |
|
Owners' equivalent rent of residences |
26.769 |
|
Tenants' and household insurance |
0.413 |
Sample selection
The selection of outlets where prices are collected is based on data from the Consumer Expenditure (CE) survey. The CE is used to collect data about where consumers purchase goods and services and how much they are spending. The sample of outlets for the lodging away from home index reflects actual expenditures for out-of-town lodging as reported by respondents residing in areas sampled by the CPI. However, lodging throughout the United States as well as foreign countries are eligible for pricing.
Pricing
Travelers often do not book lodging directly with an outlet. Instead, many choose to book through third-party websites. Prices for this index are collected using the same resource used by a respondent to the CE survey. Approximately 70 percent of prices in the lodging away from home index are collected from websites. While prices in other CPI indexes are collected on a monthly and bimonthly basis, or sometimes at longer intervals, all prices for the other lodging away from home index are collected monthly.
The other lodging away from home index is like the airline fares and ship fare indexes in that prices are reservations for a service that is consumed in the future. The reservation criteria used to collect prices for an accommodation remain fixed from one collection period to the next. For example, if an accommodation was priced in January using a reservation date in July, then the price for the accommodation in February will be the cost of the lodging in August, and so on. Approximately 69 percent of prices are for reservations within 1 month of the date of collection, and 21 percent of prices are for reservations greater than 1 month but less than 3 months from the date of collection. About 10 percent of prices are reservations greater than 4 months from the collection date.
The number of nights to reserve also remains fixed over time. About 20 percent of prices collected in the other lodging away from index are for 1-night stays, while 60 percent are for stays of between 2 and 6 days. The remaining 20 percent of prices are for stays of 7 or more days. At times, outlets may offer discounts for multiple-night reservations, especially during periods of low demand. Prices in this index also consider discounts for AAA membership and lower rates offered to seniors.
The CPI is published as a tax-included index. As such, the other lodging away from home index includes taxes and fees. Accommodations are a heavily taxed industry, and careful attention is paid to collecting taxes and fees in this index. Taxes for traditional lodging such as hotels and motels commonly include sales taxes, occupancy taxes, and tourism taxes levied by a city, county, or state. Resort or destination fees that are paid at check-in are also collected if these fees are clearly described when a price for a reservation is collected. Additionally, prices also account for charges included for short-term rentals such as service and cleaning fees.
Price change and quality adjustment
Price Change
Estimates of price change for lodging establishments are often quite volatile because the sample establishments tend to be in vacation areas (such as beaches, ski resorts, or other areas) with significant seasonal pricing patterns. A seasonally adjusted series is published which removes seasonal patterns. The non-seasonally adjusted series clearly indicates a swelling of prices during the spring, a mid-year peak, and decline in prices during the fall.
Quality Adjustment
One of the most difficult challenges for the CPI is to accurately quantify changes in the quality of items and to exclude these quality changes from price movement in an index. Each time a price is collected for a reservation, analysts in the Washington office compare characteristics of an accommodation in the current month to its description in the previous month. If any of its characteristics change, a quality improvement or deterioration may have occurred. In addition, because quality change often accompanies price change, when the price of an item changes significantly, data collectors are trained to ask a survey respondent to identify a cause.
A change in quality was clear during the COVID-19 pandemic. To slow the spread of coronavirus, many hotels reduced services such as restaurant service, fitness facilities, and pools. In the CPI, this reduction in services was not explicitly excluded from the index for other lodging away from home because of the difficulty in quantifying the value of such services in the price of a hotel reservation. Moreover, the reduction in services was widespread throughout the industry, and travelers at the outlets included in the sample were impacted as were travelers at outlets not included in the sample. As the pandemic abates, the return of services and availability of amenities is offsetting this deterioration of quality in early to mid-2020. The lodging industry began to recover from the worst effects of the pandemic in 2020 and some services and amenities were re-introduced. As before, this change in the quality of lodging service was not explicitly excluded from the index.
Data
Access data for lodging away from home in our online database.
Additional information
Additional information may be obtained from the Consumer Price Index Information Office by email or calling 202-691-7000. Information on the CPI's overall methodology can be found in the BLS Handbook of Methods.
Last Modified Date: February 9, 2024