Amex GBT: Hotel Prices to Rise Again in 2023, but at a Slower Pace

October 15, 2022June 5, 2023 Travleaks

According to a new American Express Global Business Travel study, published on Wednesday, hotel rates will rise globally once more in 2023 as a result of the pent-up demand for in-person meetings, albeit at a slower rate than in 2022 because of the economy.

In its Hotel Prices 2023 annual report, the travel management company projects rates for the next year in the most important international business centres. The paper identifies persistent issues facing the hotel sector that will raise the cost of corporate hospitality programmes.

The paper emphasises the difficulty of expanding business and leisure demand as well as rising hotel charges caused by inflation using Amex GBT historical transaction data and macroeconomic indicators. The report also highlights efforts made by hotels to make up for income losses brought on by the pandemic and labour cost increases. These two factors will present a challenge to corporate hotel programme managers, some of whom are already having trouble finding accommodations and receiving special deals.

Better sourcing, according to Amex GBT, can help buyers and managers address some problems—but not all. The agency’s Global Business Consulting division advises purchasers to use rate-shopping tools to regularly revaluate chances and have an open mind to include a variety of rate types. For buyers, market analysis will be crucial. They should take action to comprehend inventory levels as well as the quantity and variety of properties that are entering the market. Rate caps can assist companies identify places where they would need to negotiate additional inventory and might highlight problems when visitors are required to pay more, according to the TMC.

Hotels have been able to raise their prices as tourism recovered across much of the world in 2022, largely driven by leisure. While the pent-up demand for in-person meetings and events can continue to benefit hotels in 2023, the forecast for the global economy makes it doubtful that they will be able to raise rates on the same scale as they did in previous year.

Amex GBT: Hotel Prices to Rise Again in 2023, but at a Slower Pace

According to Amex GBT, discussions at the property level may be necessary to better understand rate strategies and how the company’s operation fits into the mix. This shows that volume alone may not be the deciding critical issue as hotels may grow reluctant to set aside too many rooms at a discount.

In 2023, Amex GBT selected the top 10 corporate hubs with the biggest predicted annual hotel rate increases:

Buenos Aires is up 30% as a result of rising inflation in Argentina.

Paris: up 10% as a result of a rise in both business and pleasure travel, as well as a number of major closures and reopenings following pandemic-related repairs.

Stockholm: up 9% as a result of a rise in corporate travel demand and a lack of hotel space to accommodate the flood of visitors.

Dublin: according to the study, up 8.5 percent after a remarkable rebound in 2022, with some of the highest hotel occupancy rates in Europe.

Due to a rise in group and meeting-related inbound travel, New York had an 8.2 percent increase.

So Paulo: inflation-related growth of 7.7%. According to the research, Brazil has suffered double-digit inflation rates since the third quarter of last year.

Amsterdam: increased 7.5 percent as a result of the city’s high visitor rates, which more than doubled between January and May 2022.

Frankfurt: up 7.5% as a result of anticipated pent-up demand for travel, with Germany relaxing travel restrictions later than other nations.

Due to the city’s persistent demand and short lodging supply, Seattle is up 7.5%.

San Francisco: up 7.3 percent as a result of the gradual but steady rebound in demand; the report projects that business travel revenue in 2022 will still be 68.8 percent below 2019 levels.