Amex GBT Report Predicts Modest Hotel Rate Growth In Most Key Cities
Bruce Parkinson, Open Jaw
The Canadian hotel industry is on an upswing thanks to relatively strong economic performance, slowing capacity growth, a low Canadian dollar and record-breaking tourism numbers.
In fact, according to the American Express Global Business Travel‘s (GBT) annual Hotel Monitor whitepaper released today, hotel rate rises are expected in the majority of Canada’s largest cities in 2020 -- including Toronto (4%), Vancouver (3%), Montreal (4%) and Ottawa (2%). In Toronto, hotel demand has resulted in 40 hotel construction projects currently underway, which will add more than 5,200 rooms in the city.
Outside of Canada, The Hotel Monitor 2020 predicts that hotel prices in most key cities will experience only modest rises in 2020. A global boom in hotel construction is increasing the supply of guest rooms just as international trade tensions put a dampener on demand: together, these factors will restrict the ability of hotels to raise room rates in many business destinations.
Joakim Johansson, Vice President, Global Business Consulting at GBT, said: “Despite signs that the global economy is facing challenges, the number of people travelling for business and leisure continues to grow. But, in most cities, a full hotel development pipeline means this sustained level of demand will not feed into big rate rises.”
Here’s a quick look at some key regions:
Europe:The Hotel Monitor 2020 forecasts small room rate rises across Europe’s main business cities as low growth, and uncertainties about Brexit and the general global economic outlook take their toll on demand. On the supply side, hotel development is at a record high in Europe.
North America:In the United States, flat occupancy and a full pipeline of rooms in construction will drive competition and limit the ability of hotels to raise prices. Canada is more likely to see rates rise, thanks to a relatively strong economic performance and slowing capacity growth. Chicago, San Francisco and Toronto will see the biggest increase in room rates (5%, 4%, 4% respectively). In contrast, guestroom rates for New York are expected to decrease by 3% as 29,000 new guestrooms become available over the coming months.
Central & Latin America:Concerns about political and economic uncertainty have negatively impacted business travel in Central and Latin America. Nonetheless, prices are expected to rise as demand outpaces growth in a region that has seen its hotel construction pipeline decrease by 25% year-on-year.
Middle East & 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 forecast falls of as much as -10% in Doha and -8% Riyadh. As host to the 2020 Expo, Dubai should see rising visitor demand: however, room rates are expected to be static.
Asia Pacific:The hospitality industry is growing rapidly across the region, with thousands of additional beds in key cities every year. Despite the added capacity, the sustained demand in these growth economies means rates are likely to increase. For example, Bangalore and Tokyo will see rates increase by 5% and 4%, respectively.
As well as forecasting room rates, the Hotel Monitor 2020 explores key trends shaping global hospitality. Technology is a major theme: digital innovation is driving change across the hotel landscape, creating new opportunities to increase savings and improve the traveller experience. The report identifies key areas where technology and data insights are impacting corporate lodging, and looks at how organizations are responding.
Despite the rise of non-traditional hotel options (including short-term rentals like Airbnb) and international trade tensions continuing to dampen the economic outlook, key trends in technology are driving the hotel industry boom on a global level, the GBT report says.
Today’s travellers have a comfort level with technology and are accustomed to managing their own booking experience, making it important for travel managers to implement tools that will meet traveller’s ever-changing expectations while simultaneously driving policy adherence.
Another trend observed across the globe by the Hotel Monitor 2020 is the growing tendency of the major hotel brands to invest in new lifestyle formats to attract modern business travellers. These properties offer shared working spaces and a less formal environment than might be found in more traditional corporate travel hotels.
For detailed analysis of factors impacting hotel rates at a national, regional and local level in the world’s key business centres, you can download the Amex GBT Hotel Monitor 2020 reporthere.
Bruce Parkinson Editor-in-Chief
An observer and analyst of the Canadian and international travel industries for over 25 years, Bruce uses the pre-dawn hours to prepare a daily news and information package to keep industry members up to date.