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Australian Hotel Prices Will Continue to Rise In 2020

July 29, 2019 Hotel Trends No Comments Email Email

The Hotel Monitor 2020, published by American Express Global Business Travel (GBT), predicts that hotel prices in most key cities will experience only modest rises in 2020. http://www.tourismlegal.com.au/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.

Melbourne is expected to see a 2% increase in room rates in 2020. The fourth-fastest growing city in the developed world, growing by 125,000 people a year, Melbourne is predicted to be Australia’s biggest city by 2028. A 2% increase in room rates reflects the steady growth of Melbourne as a key business travel destination in Australia. Room rates in Sydney are expected to rise by 1%.

Jo Sully, Vice President and Regional General Manager of American Express Global Business Travel, said “the rise of hotel prices in Australia for 2020 are reflective of steady growth in what is one of the Australia-Pacific’s most important business travel destinations. Sydney and Melbourne are key destinations for business in Australia, and it’s great to see these destinations continue to contribute to the local economy, at a slow yet steady rate.”

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.”

Guestroom rate movements, region-by-region

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. Domestic travellers are increasingly filling hotel beds, compensating for any falls in international visitor numbers stemming from a less optimistic global economic outlook.

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. Germany is leading the development boom with 379 projects in the pipeline. The UK follows closely behind with 281 hotels in the works. London will see a further 10,000 new rooms open in 2019 and 2020.

North Americain 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 Americaconcerns 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.

Technology and new hotel formats re-shape hospitality, worldwide

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 organisations are responding.

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.

Johansson said: “For several years, GBT has been charting the rise of the modern business traveller, who wants a more informal, flexible and digitally smart environment to work and rest. 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.”

Key 2020 city predictions

 

Atlanta +1%
New York -3%
Seattle +2%
   
Bogota +4%
Mexico City +3%
Santiago +4%
Sao Paulo +5%
   
London +1%
Munich 0%
   
Dubai 0%
Johannesburg +4%
   
Bangkok +2%
Shanghai +2%
Sydney +1%
Tokyo +4%
 

Source: GBT

 

Note: all forecasts are in local currencies

 

For detailed analysis of factors impacting hotel rates at a national, regional and local level in the world’s key business centres, please download the Hotel Monitor 2020 report. The Hotel Monitor 2020 is the latest in the regular Monitor series designed by the Global Business Consulting team at GBT to help travel buyers optimise their travel policies and programmes. For a comprehensive view on hotel price movements across 150 key business cities, please download 2020 Cities Forecast.

To accompany the focus on technology and data insights in the Hotel Monitor 2020, GBT’s Global Business Consulting team has developed a white paper to help buyers and travel managers understand how data can differentiate their travel program, and enable them to work more strategically. Download your copy of Putting data to work for your travel program – a buyer’s guide.

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