TORONTO — Hotel rates will continue to rise in 2024, in most locations around the world, according to a new report by American Express Global Business Travel (Amex GBT).

The Hotel Monitor 2024 finds that most cities around the world should experience rate increases in line with local inflation, following the large price jumps in 2022 and 2023, fuelled by pent-up demand which helped inflate rates.

The report looks at hotel price trends in 80+ major cities based on analysis of millions of hotel transactions and International Monetary Fund (IMF) economic data.

SKY-HIGH HOTEL RATES IN 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 long list of new hotel construction projects across Canada was announced this year which will increase supply, putting downward pressure on rates. But new rooms may not arrive in significant numbers until later in 2024, according to the report.

Across the country, rates are expected to rise by about 7.8%.

STAFFING A KEY FACTOR

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.

While low occupancy traditionally acted as a trigger for hotels to lower rates, “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,” according to the report.

Analysts believe that leisure travel is likely to impact prices less as demand is now normalizing.

GLOBAL OUTLOOK

U.S. – Inflation is slowing in the U.S., 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. The report advises travel industry professionals to keep an eye on New York City, where new legislation for short-term rentals could throttle supply, increasing hotels’ ability to push up prices on peak demand days. Meanwhile, despite ongoing investment in hotel inventory, cities with tight supply – especially 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.

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.

Australasia – 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.

The full report can be found here.