US, European hotel prices may retain mounting, field executives say

By Doyinsola Oladipo

NEW YORK (Reuters) -Lodge area costs in the U.S. and Europe are mounting and may get even additional pricey as source has failed to continue to keep up with need, business executives claimed.

U.S. resort home offer is barely growing as tighter lending specifications from regional banking companies make it more difficult for developers to secure funding, even as journey need has developed right after the COVID-19 pandemic. This is aiding to sustain better prices that executives say should have been reached many years in the past.

“We experienced strong supply expansion more than an prolonged interval of time, which did preserve charges down,” IHG Lodges and Resorts CEO Keith Barr said at the NYU International Hospitality Field Expense Convention on Monday.

The selection of U.S. lodge rooms elevated about 3% in April of 2023 from the same month in 2019. Some 153,000 resort rooms were being beneath development in April of 2023, down from a peak of 220,000 in the exact same month in 2020, in accordance to hotel analytics company STR.

Offer is not anticipated to pick up noticeably for the subsequent calendar year or two, Barr claimed.

“It truly is just heading to aid pricing being where it should really have been around time, which is good for this field.”

U.S. lodge fees in Could averaged $157.45 a night, up 17% from the exact month in 2019. Premiums dropped to $73.25 in April 2020 throughout the pandemic and did not continually rise previously mentioned $100 again until March 2021, STR information present.

“Relative to the substantial downturn and the shutdown in the marketplace in 2020, all these rates seem to be nuts,” Hyatt Accommodations CEO Mark Hoplamazian explained at the identical meeting.

Bigger charges, nonetheless, may be discouraging shoppers from scheduling hotels. U.S. resort scheduling facts reveals a few consecutive months of detrimental calendar year-about-yr expansion, according to a notice from Michael Tran, a handling director at RBC Capital Markets.

Mid-scale and economic climate rooms now price 15% to 20% more than right before the pandemic, and the boosts are keeping, Accor CEO Sebastien Bazin claimed at the convention.

“For the earlier 20 many years resort operators have been not daring ample to restate the price ranges of hotel rooms,” he claimed. “50 % of the men and women reserving rooms are not asking for the rate. They are stating ‘Give me your best suite.'”

Bazin explained Paris resort rooms in the previous 6 months value 50% far more than in 2019, while selling prices in London rose 30% through the exact time period.

“There’s absolutely likely to be a ceiling,” but the sector has not reached it nevertheless, IHG’s Barr mentioned.

(Reporting by Doyinsola Oladipo in New York Editing by Richard Chang and Paul Simao)