Hotel rates likely to rise globally in 2024

Hotel rates are expected to continue to rise in most locations globally during 2024 despite an expected softening of leisure travel demand, according to new forecasts from American Express Global Business Travel (Amex GBT).

The Hotel Monitor 2024 finds that rates could rise by as much as 17.5% in some cities, where tight supply and local conditions will push the average cost of a room upwards. For example, Shanghai is expected to rise by 8.4%, Singapore by 7.5%, and Sydney by 4.9%.

Amex GBT’s Hotel Monitor 2024 forecasts hotel price trends in more than 80 major cities based on analysis of millions of hotel transactions and International Monetary Fund (IMF) economic data.

These rate increases are in line with local inflation, following the large price jumps in 2022 and 2023 due to a surge in travel after the pandemic. Softening leisure travel demand should be replaced by the continued uptick in business travel, and meetings and events.

Traveller behaviour

The change of working culture towards more flexible, hybrid and remote models signals a slight lift in weekend corporate travel and a move to fewer but longer business trips as travellers combine business trips with leisure activities.

Hence, global hotel chains are expanding extended stay offerings, whilst vacation letting companies report growing requests for high-speed Wi-Fi and later departures to aid remote working, suggesting that business travellers are increasingly looking beyond traditional hotel accommodation.

Inflation eases

Even with global inflation beginning to slow, it continues to play an influential role in room rates as increased costs put pressure on hotel operating margins. Chief amongst these is staff costs, with hotel wages in the US reaching record levels in 2023.

This rising cost base is disrupting the traditional relationship between supply and demand within the hotel industry, and hotel operators are increasingly limiting inventory to respond to staffing shortages, reduce overheads and protect rates. This means travelling off peak may no longer offer previously available levels of savings as the link between rates and occupancy weakens.

Hotel programme tips

The anticipated changes in leisure travel may provide opportunities for corporates to negotiate better deals with hotel partners for 2024. Large increases absorbed during 2023 have put pressure on travel buyers to manage costs, while rising sustainability commitments add another dimension to programme building.

New programme priorities and changing travel patterns mean travel buyers should re-examine existing arrangements and prioritise negotiating better rates in the most frequently visited hotels and cities. Concentrating spend on a smaller number of providers should help secure better rates, improved terms and other amenities, even for smaller businesses.