The post-COVID drive to experience the best in travel appears to be driving up hotel prices around the world.
CoStar research shows the number of worldwide hotels charging USD$1,000 per night or more has tripled since 2019. The company recently said there were 150 hotels around the globe with an average daily rate of USD$1,000 in the first six months of 2019. For this year, that number has skyrocketed to 460, more than triple what it was just five years ago.
And you thought the price of eggs was bad.
“Strong leisure demand from high-end travelers has supported robust pricing increases at high-end hotels,” CoStar said in what might be the understatement of the year in the hotel biz. “Anecdotally, hotel operators have reported that in 2020, many of their guests felt unable or unwilling to travel and that in the following years, they wanted to make up for lost time.”
“Since 2019, the number of hotels in that price range has tripled in the Americas and Europe and more than doubled in the Asia Pacific and the Middle East and Africa region,” said CoStar. “This speaks to the proliferation of higher-end brands and the global nature of high-end leisure demand.”
The report said there were 22 hotels in the U.S. with an ADR of $1,000 in 2019. This year there are 80. That’s a 380% per cent increase in five years.
“Looking ahead, continued growth in hotels charging these high ADRs is likely as the growth will be fueled by two trends,” CoStar said “For one, hotels will continue to monetize the demand for their high-end offerings. In addition, hotel developers will continue building properties to target the high-end income level, and the number of properties reporting an ADR of over $1,000 will likely steadily increase.
Open Jaw checked Expedia to find prices of hotels in destinations that are popular with North Americans.
A room on 19OCT 2024 at the Fairmont Banff Springs was listed at USD$2,072, plus taxes and fees of $281 for a total of USD$2,353. That’s more than $3,000 in Canadian dollars. But Expedia showed the pleasant Elk and Avenue hotel in Banff for just USD$213, including taxes and fees.
For London on the same day, Expedia showed the Hyatt Regency London Albert Embankment for USD$281, taxes and fees included. The Rosewood London was listed at USD$1,089 all included. That’s high, but a relative bargain compared to the Fairmont in Banff.
In Paris, the Best Western Au Trocadero was listed at USD$321, including taxes and fees. But the Park Hyatt was shown at USD$1,911.
For Rome, the River Palace Hotel was listed on Expeida at USD$292 all included. But the sumptuous Hassler Roma was listed at USD$2,009, all taxes and fees included.
Jan Freitag, STR's senior vice president of lodging insights and national director of hospitality analytics for CoStar Group, told Travel Weekly the trend reflects a broader "bifurcation" is occurring across the hospitality sector.
"In general, this means that the upper end of the market is still doing quite well, but the lower end of the market is not," he said.
Frederic Dimanche, Director, Ted Rogers School of Hospitality and Tourism Management in Toronto notes: “The pandemic and the recent worldwide inflation also resulted in increased costs of operating. For example, labour shortages in hospitality have led to increased wages for skilled employees to attract and keep them.”
Dimanche also said the most important factor in explaining the rising demand for luxury travel is that global statistics indicate the number of wealthy people in the world is growing steadily.
