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Modest hospitality price rises predicted for 2020

Modest hospitality price rises predicted for 2020

The Hotel Monitor 2020, published by American Express Global Business Travel, predicts that hotel prices in most key cities will experience only modest rises next year.

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.”

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.

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 (five, five and four per cent respectively).

In contrast, guestroom rates for New York are expected to decrease by three per cent as 29,000 new guestrooms become available over the coming months.

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 per cent year-on-year.

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 ten per cent in Doha and eight per cent in Riyadh. 

As host to the 2020 Expo, Dubai should see rising visitor demand: however, room rates are expected to be static.

The hospitality industry is growing rapidly across the Asia Pacific 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 five and four per cent, respectively.

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

As well as forecasting room rates, the Hotel Monitor 2020 explores key trends shaping global hospitality.