High inflation, high demand: Amex GBT forecasts rise in 2023 hotel prices
Hotel rates worldwide will increase again in 2023 thanks to pent-up demand for in-person meetings, but at a rate lower than 2022 due to the economic climate, according to an American Express Global Business Travel report.
The report highlights rising hotel rates due to inflation and the challenge of increased corporate and leisure demand. The report also flags hotel efforts to recoup income losses from the pandemic exacerbated by rising labor costs — the combination of which will be challenging to corporate hotel program managers, some already struggling to secure accommodations and discounted rates.
Buyers and managers can mitigate some issues — not all — through better sourcing, Amex GBT said. The agency’s Global Business Consulting advisory arm recommends buyers keep an open mind to include multiple rate types and utilize rate-shopping technology to continuously refresh opportunities.
Market analysis will be key for buyers, who should take steps to understand inventory levels and the numbers and types of properties coming online in the market.
Conversations at the property level may need to be had to better grasp rate strategies and how the corporation’s business fits into the mix, according to Amex GBT, which suggests volume alone may not be a deciding key issue, as hotels could become reticent to set aside too many rooms at a discount.
Amex GBT listed the major cities projected to have the highest rate increases for 2023:
- Buenos Aires: up 30% due to Argentina’s increasing inflation.
- Paris: up 10% due to an increase in business and leisure travel as well as a swath of notable openings and reopenings from renovations during the pandemic.
- Stockholm: up 9% due to an uptick in corporate travel demand as well as a shortage of hotel supply for the influx of travelers.
- Dublin: up 8.5% following a significant recovery in 2022, achieving some of the highest hotel occupancy levels in Europe, according to the report.
- New York: up 8.2% due to increased inbound group- and meeting-related travel.
- São Paulo: up 7.7% due to inflation. Brazil has experienced double-digit inflation points since the third quarter of last year, according to the report.
- Amsterdam: up 7.5% due to the city’s high tourism rates, which quadrupled year over year in the January-May 2022 period.
- Frankfurt: up 7.5% due to expected pent-up travel demand, as Germany eased travel restrictions later than other countries.
- Seattle: up 7.5% following the city’s consistent demand and low room inventory.
- San Francisco: up 7.3% due to the slow but consistent demand recovery; business travel revenue in 2022 still is projected to be 68.8% lower than 2019 levels, according to the report.
source: Business Travel News