Inflation and increased salaries in hospitality key factors in rising hotel rates
Inflation fuelled “super aggressive” rises in hotel rates during the summer of 2022 and rate increases are likely to continue into 2023, according to thought leaders who spoke at the Institute of Travel Management Trending Summit in London this month.
Hotels and airlines are under financial pressure following the pandemic. In the third quarter of 2022, rates were 30% up on 2019, and that has continued into the fourth quarter.
Dan Beauchamp, head of global business consulting in Europe at American Express Global Business Travel head of global business consulting in Europe, told the summit: “Hotels have increased salaries 10%, 15%, even 20% and we’re seeing that feed through in rates.”
Beauchamp added: “No one can calculate the return on investment on a trip yet. [But] you can look at the correlation between density of travel and revenue.”
He forecast increased scrutiny “around why you are travelling”, saying: “We believe there will be less volume of travel. We’re already starting to see that. Travel is particularly impacted by inflation.”
James Marchant, head of business development at easyJet, argued: “What we need is cost stability. People love dynamic pricing when rates come down but not when they go up. The most important thing is to book in advance to save money. You can save 13% on easyJet if you book a week in advance and 26% if you book two weeks in advance.”