Hotel prices are set to rise “across the board” in 2023 with European cities likely to see some of the steepest increases, according to a new report from American Express Global Business Travel.
The travel management company’s Hotel 2023 Prices report said that hotel companies face an “array of challenges” that will push up prices, including staff shortages, dealing with pent-up demand and soaring inflation.
American Express GBT said that hotel prices have risen more sharply in 2022 in destinations which lifted their Covid-19 travel restrictions earlier in the year, which led to an influx of mainly leisure visitors.
The TMC is predicting that Europe and the Americas region will experience the largest increases in hotel rates during 2023, with cities in Asia Pacific likely to see “markedly lower” rises.
European cities such as Paris (up 10 per cent year-on-year), Stockholm (+9 per cent) and Dublin (+8.5 per cent) are among the destinations predicted to see the highest rises in prices next year.
Amex GBT said all these cities had “supply constraints of some kind or another and strong appeal for business and leisure travellers alike”.
Meanwhile London, which achieved record hotel rates in summer 2022, is forecast to see prices go up by another 6.2 per cent next year. Other key European gateways such as Amsterdam and Frankfurt are both forecast to experience 7.5 per cent rises in hotel rates in 2023.
Outside Europe, the largest increases are expected in cities such as New York (+8.2 per cent), Sao Paulo (+7.7 per cent), San Francisco (+7.3 per cent) and Dubai (7 per cent).
Major business travel destinations in Asia are forecast to see more modest increases in hotel prices – rising by 3.9 per cent in Singapore, 3 per cent in Tokyo and just 1.3 per cent in Hong Kong.
Some Latin American cities are set for the highest year-on-year percentage increases in hotel rates due to rocketing inflation – prices in Argentina’s capital Buenos Aires, for example, are likely to rise by 30 per cent.
American Express GBT’s report comes after fellow TMC CWT predicted that global hotel rates would rise by 8.2 per cent in 2023 on top of an 18.5 per cent increase in 2022.
Further evidence of the hotel industry’s recovery this year comes from technology firm Amadeus, which found that global occupancy rates exceeded pre-Covid levels in July and August, with a “strong” final three months of 2022 expected.
Amadeus’ data showed that worldwide occupancy in summer 2022 was just below 70 per cent, which was an increase of around 5 percentage points on the same period in 2019.
The company added that business travel and group bookings had shown a “steady recovery” during the year.
According to Amadeus, global corporate hotel bookings, which have been made through all the major GDSs, were 62 per cent below 2019 volumes at the start of 2022 but this gap has “progressively closed” during 2022, with August figures only 23 per cent behind 2019’s numbers.
Amadeus also noted that 4.3 million group nights had already been booked for the first half of 2023, which illustrated a rebound in the conference and meetings markets as “confidence” grew about booking further ahead.
Katie Moro, vice president, data partnerships, hospitality at Amadeus, said: “It is very encouraging to see such positive data this summer across all segments of hospitality.
“As the appetite to travel looks set to continue to build in the forthcoming months, it is essential that hoteliers and destination marketers have accurate, forward-looking data insights to enable them to maximise their revenue strategies and minimise the ongoing challenges connected to staff shortages.”