Hotel prices to keep rising in 2023, says American Express Global Business Travel

Pent-up demand for business meetings driving tariffs
2022-10-01
/
/ New Delhi
Hotel prices to keep rising in 2023, says American Express Global Business Travel

Hotel prices in Paris set to rise second-fastest in world in 2023

As it enters its last quarter, the year 2022 has been marked by a sharp rise in hotel prices, mainly on the back of a stronger than expected recovery in demand, but also due to rising operating costs of hotels, thanks to inflation, higher wage costs and higher energy costs. A report by American Express says that the prices would keep rising in 2023 as well, though at a slower rate than this year.
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Hotel prices around the world are destined to keep rising next year, albeit at a slower pace than in 2022, according to the Hotel Prices 2023 report by American Express Global Business Travel. The report, prepared once a year by the travel management subsidiary of American Express is to forecast hotel rates for the coming year in the world’s top business travel hubs/destinations.

American Express Global Business Travel attributes the imminent increase to pent-up demand for in-person business meetings that has arisen from the pandemic. However, it anticipates that the cost of corporate accommodations will climb at a lower rate due to the current economic climate.

The Hotel Prices 2023 report spotlights the hotel industry’s ongoing struggles that are expected to prompt price increases in corporate hotel programs. Incorporating Amex GBT historical transaction data and macroeconomic factors into its methodology, the report predicts rising hotel rates in 2023, stemming from the combination of record economic inflation, and overblown demand for both business and leisure travel.

The report also reveals that hotel companies are actively attempting to recoup revenue lost during the pandemic and offset rising labour costs by raising their rates. This is expected to present corporate hotel program managers, some of whom are already struggling to procure accommodations at a discount, with increased challenges. In the report, the company suggests that such buyers and corporate programme managers can alleviate some of the difficulties by utilising improved sourcing methods.

Amex GBT has projected that the following major business travel hubs will constitute the top 10 in terms of highest year-over-year hotel rate increases for 2023:

Buenos Aires: Argentinian capital expected to see a jump of 30 pc, mainly due to skyrocketing inflation in Argentina.

Paris: Prices expected to rise by 10 pc due to a substantial increase in both business and leisure travelers, as well as a number of notable new openings and post-renovation reopenings.

Stockholm: Sweden’s capital and largest city will see an increase of 9 pc in hotel prices due to an uptick in corporate travel demand, as well as a shortage of hotel capacity for the influx of travelers.

Dublin: With the Irish capital registering a notable recovery in 2022, achieving some of the highest hotel occupancy levels in Europe, prices here are expected to go up 8.5 pc.

New York: The Big Apple may see a price rise of 8.2 pc due to increased inbound group- and meeting-related travel.

São Paulo: Brazil’s largest city may see an increase of 7.7 pc in hotel prices in 2023, due to inflation. Brazil has experienced double-digit inflation points since the third quarter of last year.

Amsterdam: The main touristic site in the Netherlands would see a jump of 7.5 pc in prices due to the city’s high tourism rates, which quadrupled year over year during the period from January through May 2022.

Frankfurt: Another European hub, though more for business, Frankfurt, may see hotel prices go up by 7.5 pc due to an expected swell of pent-up demand, given that Germany eased its travel restrictions later than many other countries.

Seattle: American Express GBT expects the hotel prices to rise by 7.5 pc following the city’s consistent demand levels and low room inventory.

San Francisco: Another city on American West Coast, San Francisco, which is home to the Golden Gate Bridge may see hotel prices increase by 7.3 pc due to the slow but consistent demand recovery; business travel revenue in 2022 is still projected to be 68.8 pc lower than 2019 levels.

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