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.
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 percent year over year. Boston follows at 11.3 percent and San Jose at 10.2 percent. Dallas is projected to see an 8.2 percent increase year over year, according to Amex GBT, higher than New York at 6.8 percent.
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 percent year over year in 2024. Other spiking markets include Mumbai and Delhi at 15 percent and 12 percent, respectively, Cairo at 14.6 percent, Bogota, Colombia, at 14 percent, and Paris at 11 percent. 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.”
