Global hotel rates will increase in 2024 amid continued
inflation and variable supply and demand scenarios, impacting both transient
travel and major meeting and convention destinations in the United States,
according to a new report from American Express Global Business Travel’s
consulting team.
Amex GBT used its internal data lake and the Prophet model
for time series forecasting coupled with International Monetary Fund’s
inflation forecasts across more than 80 cities worldwide to inform its Hotel
Monitor 2024.
Amex GBT forecasts the largest U.S. city hotel rate jump in 2024 in Chicago at 12.6% year over year. Boston follows at 11.3% and San Jose at 10.2%.
Corporate travel and the return of major events will drive
demand in large cities in the United States, while leisure demand will
normalize from last year. Hotel occupancy will continue to improve going into
2024, and key cities like Dallas and Chicago will light up with corporate
convention demand, according to the report.
As a result, Amex GBT forecasts the largest U.S. city hotel
rate jump in 2024 in Chicago at 12.6% year over year. Boston follows at 11.3%
and San Jose at 10.2%. Dallas is projected to see an 8.2% increase year over
year, according to Amex GBT, higher than New York at 6.8%.
Short supply will be another rate driver in cities like
Boston. Tight inventory and increased demand could prove challenging—and
expensive—for corporates negotiating in that market. New York hotel prices
could also spike following recent legislation to restrict short-term
rentals—i.e. Airbnb and VRBO—with unregistered hosts in the city, according to
the report.
One bright spot for corporate travel and meeting buyers,
however, is Amex GBT’s projected “normalization” for leisure demand, which the
GBT report attributed to leisure travelers becoming “more price sensitive,”
citing STR.
Amex GBT consultants had a few suggestions for buyers to
mitigate rate spikes, including the opportunity to consolidate transient and
meetings spend data and “unlock rich insights” that could increase leverage, if
companies can also bring the two sides together on a buying strategy.
Perhaps counterintuitively, Amex GBT had encouraging words
for small and midsize travel buyers, asserting that the segment had captured
the attention of suppliers and were capitalizing on new program opportunities
hotels are designing to attract that client type. Amex GBT also urged such
clients to lean on their TMC preferred rate programs where they had less
volume.
Global markets
Global inflation is set to fall in 2024, but it will
continue to impact hotel rates.
The 2024 Hotel Monitor projects rate hikes in Buenos Aires
will top 17.5% year over year in 2024. Other spiking markets include Mumbai and
Delhi at 15% and 12%, respectively, Cairo at 14.6%, Bogota, Colombia, at 14%,
and Paris at 11%. According to Amex GBT, buyers should expect hotel rate hikes
to coincide with local inflation.
Major trends
Additional hotel category dynamics Amex GBT noted in the
report included continued momentum for blended travel among business travelers
and the decoupling of occupancy rates and cost. Report authors concluded
occupancy and room rates “are no longer linked” as hotels are “happy with lower
occupancy so long as they can raise their rates.”