Hotel rates to continue upward trajectory in 2024: Amex GBT study

After three turbulent years, hotel rates will continue to rise in most locations globally during 2024, according to a new report by American Express Global Business Travel (Amex GBT). 

The Hotel Monitor 2024 finds that most cities around the world should experience rate increases in line with local inflation, following the large price jumps in 2022 and 2023 fueled by a surge of so-called “revenge tourism” which helped inflate rates.

The report, which looks at hotel price trends in more than 80 major cities based on analysis of millions of hotel transactions and International Monetary Fund (IMF) economic data, offers predictions for top business travel destinations including:

Record-breaking rates in Canada

According to the report, Canada’s hotel industry achieved record-breaking average daily rate (ADR) and revenue per available room (RevPAR) levels in 2023. Vancouver saw the country’s highest occupancy, at 89%.

A raft of new hotel construction projects across Canada was announced this year which will increase supply, putting downward pressure on rates. But new rooms may not arrive in significant numbers until later in 2024.

Across the country, rates are expected to rise by about 7.8%.

Price moves

While global inflation is set to fall in 2024 it will continue to impact hotel costs, according to the report. 

A key factor here is staffing, with hotel wages in North America at record levels.

“Traditionally, low occupancy acted as a trigger for hotels to lower rates,” the report reads. “Today, hotels are happy with lower occupancy so long as they can raise their rates. This is especially the case in destinations where hotels cannot deploy their full inventory because of staff shortages.”

Analysts believe that leisure travel is likely to impact prices less as demand is now normalizing.

Outlook around the world

United States

Inflation is slowing in the US, but hotel rates are set to continue their increase across the country off the back of occupancy growth in 2024. The return of major trade shows will drive demand into key convention cities such as Chicago, and Dallas. 

Keep an eye on New York where new legislation for short term rentals could throttle supply, increasing hotels’ ability to push up prices on peak demand days. Despite ongoing investment in hotel inventory, cities with tight supply – most notably, Boston (11.3%) – could see significant price rises.

Latin America

With modest growth expected and high inflation persisting across much of the region, hotel prices will continue to rise across the region.

Europe

Despite modest economic prospects and a strong hotel development pipeline, hotel prices are trending upwards in 2024, albeit with reduced velocity compared to 2023.

Middle East 

Hotel development is at a historic high across the Middle East but with strong GDP growth fuelling demand for travel, hotel rates will continue to rise.

Africa

Given the size and diversity of Africa, Amex GBT is forecasting a spread of rate rises across the continent. One note on Sub-Saharan Africa; the IMF warns that this region’s economic performance is particularly vulnerable to geopolitical tensions

Asia

The reopening of China in early 2023 was a milestone for travel in Asia. As travellers return to this global growth leader – forecast to experience 5% GDP expansion in 2024 – the company expects significant rate increases as hotels seek to regain ground after modest price rises last year.

Australasia

Inbound visitor numbers to Australia and New Zealand have rebounded sharply – even if they’ve not recovered to 2019 levels. Rates will continue to rise but new openings in key cities should moderate increases.

Access the full report here.

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