April 24, 2024

Modest hotel rate rises predicted for 2020

Hotel rates in most key business cities are expected to rise 'modestly' in 2020, according to the Hotel Monitor 2020.

The report from American Express GBT says a global boom in hotel construction is increasing supply at the same time as international trade tensions are slowing demand, meaning there are unlikely to be significant price hikes next year.

“Despite signs that the global economy is facing challenges, the number of people travelling 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.”

Small rate rises are predicted across European hotels in 2020, where hotel development is at a record high. Nearly 300 hotels are in the pipeline in the UK with London alone gaining 10,000 new hotel rooms in 2019 and 2020. Rates in the capital and in Edinburgh are predicted to rise just 1%.

Elsewhere in the UK, rates will remain unchanged in Manchester and Glasgow, and fall by 13% in Aberdeen.

Rates are not expected to move much in the US, although increases of 4%-5% could be seen in Chicago and San Francisco. In contrast, rates in New York, Denver, Miami and Minneapolis are all predicted to fall.

The report also identifies a series of trends in the hotel sector, including the tendency of hotel groups to invest in new lifestyle brands featuring co-working spaces and less formal environments.

“The modern business traveller wants a more informal, flexible and digitally smart environment to work and rest,” says Johansson.

“Hotel providers, both big global groups and more local chains, are responding to this need with new hotel formats or serviced apartments. Travel managers need to be ready to accommodate this emerging traveller preference within their managed programmes.”

The full report can be download here.