As “revenge travel” continues, hotel guests should expect to pay increasingly higher room rates in 2024, according to a new report from American Express Global Business Travel, which says the rate spike follows large price jumps in 2022 and 2023. In Canada, the Hotel Monitor 2024 study forecasts record-breaking rates in Canada including percentage increases of 8.9, 8.3 and 6.7 percent in Vancouver, Montreal, and Toronto respectively.
Amex GBT’s Hotel Monitor 2024 study 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. The reports says rates will increasing globally, varying according to local inflation.
The highest rate increases are predicted for Chicago at 12.6%, followed by Paris (11%), Berlin (9.4%), London, (9.1%), Vancouver, Shanghai (8.4%), Montreal, Singapore (7.5%), New York (6.8%) and Toronto.
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 were announced this year which will increase supply, putting downward pressure on rates, however new rooms may not arrive in significant numbers until later in 2024. Across the country, rates are expected to rise by about 7.8%.
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.
Global outlook
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 fueling 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.
Australia: 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.