Looking to book event space next year? According to American Express Global Business Travel (GBT), hotel prices are only set to rise modestly, with some markets even seeing declines.
According to the study, a global boom in hotel construction is increasing the supply of guest rooms as international trade tensions put a damper on demand, and as a result, hotels are restricted in their ability to raise room rates in many destinations.
Here’s a region-by-region breakdown of what to expect:
Europe: Small room rate rises are set to take place in Europe’s main business cities due to low growth and uncertainties about Brexit and the general global economic outlook, which are limiting demand. On the supply side, hotel development is at a record high in Europe, AmEx GBT said. 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 America: 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, according to the report. Canada is more likely to see rates rise due 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 percent as 29,000 new guestrooms become available over the coming months.
Central and Latin America: Concerns about political and economic uncertainty have negatively impacted business travel in Central and Latin America, AmEx GBT said. Nonetheless, prices are expected to rise as demand outpaces growth in a region that has seen its hotel construction pipeline decrease by 25 percent year-on-year.
Middle East and Africa: A hotel construction boom across the Middle East, but largely focused on the United Arab Emirates, means supply will outstrip demand, leading to falls of as much as 10 percent in Dohaand 8 percent Riyadh, AmEx GBT forecasts. As host to the 2020 Expo, Dubai should see rising visitor demand; however, room rates are expected to be static.
Asia Pacific: The hospitality industry is growing rapidly across the region, according to the report, 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 percent and 4 percent, respectively. Domestic travelers are increasingly filling hotel beds, compensating for any falls in international visitor numbers stemming from a less optimistic global economic outlook.