Modest Hotel Rate Increases in 2020: American Express Global Business Travel
Business travelers won’t see a big jump in hotel rate increases globally in 2020, according to a Hotel Monitor 2020 report, published by American Express Global Business Travel (GBT). Here are the key findings, courtesy of writer Janeen Christoff and travelpulse.com.
The recent study found that a global boom in hotel construction has led to an increase in supply of hotels, at the same time that international trade tensions are dampening demand from travelers, restricting the ability for hotels to raise their rates.
“Despite signs that the global economy is facing challenges, the number of people traveling for business and leisure continues to grow,” says Joakim Johansson, Vice President, Global Business Consulting at GBT. “But, in most cities, a full hotel development pipeline means this sustained level of demand will not feed into big rate rises.”
Other emerging hotel trends—more tech, less formal
The Hotel Monitor 2020 also identified several key trends with hotels. Most importantly, technology’s ability to drive change within the hotel experience.
Johansson said: “For several years, GBT has been charting the rise of the modern business traveler, who wants a more informal, flexible and digitally smart environment to work and rest. Hotel providers, both big global groups and more local chains, are responding to this need with new hotel formats or serviced apartments. Hotels need to be ready to accommodate this emerging traveler preference.
In addition to tech advancements, shared working spaces and a less formal environment are driving the transformation of traditional business hotels with a focus on lifestyle enhancements.
U.S. hotel rates will remain flat while Canada predicted to rise
Flat occupancy rates and a full pipeline of room construction is driving competition and limiting the ability to raise rates.
Canada’s relatively strong economic performance and slowing capacity growth could lead to rate increases. Chicago, San Francisco and Toronto will see the biggest increase in room rates (5 percent, 4 percent, 4 percent respectively), according to the Hotel Monitor 2020 while guest room rates in New York are expected to decrease by 3 percent.
Hotels in Europe, Middle East and Africa
The Hotel Monitor found that, in Europe, there will be a small increase in price. Uncertainties about Brexit and low growth in Europe’s main business centers as well as the global economic outlook will likely take a toll on demand.
Hotel development in the region is also at a record high with Germany leading the way and the U.K. following closely behind. London will see a further 10,000 new rooms open in 2019 and 2020.
Concerns about political and economic uncertainty have negatively impacted business travel in Central and Latin America, says the Hotel Monitor 2020. However, prices are expected to rise as demand continues to outpace growth. Hotel construction has decreased 25 percent year over year.
In the Middle East and Africa, a hotel construction boom across the Middle East, but largely focused on the United Arab Emirates, means supply will outstrip demand and lead to forecasted falls of as much as 10 percent in Doha and 8 percent in Riyadh.
The hospitality industry is growing rapidly across the Asia Pacific, with thousands of additional beds in key cities every year. Despite a capacity increase, rates are still expected to rise between 4 and 5 percent.
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