Hotel prices have been through a rollercoaster over the past four years. After sharply falling in March 2020 at the onset of Covid lockdowns, hotel rates recovered rapidly soon after, crossing pre-Covid levels in summer of 2021- largely aided by huge pent-up consumer demand, constrained hotel supply and rising inflation rates. 2023 however has seen moderating hotel pricing growth as demand normalizes and inflation rate growth slows. As we enter 2024, where inflation growth is expected to further ease off and we largely move away from Covid-era economic trends, the big question in the hotel industry remains: will pricing strength continue into 2024?
We believe that whilst prices won’t report double-digit growth that was seen through the pandemic, on an absolute dollar level prices are still going to continue rising.
This is due to three key reasons:
- Hotel prices haven’t yet displayed any real pricing strength above inflation
- Occupancy levels have not recovered yet to pre-Covid levels, with occupancy recovery aiding further RevPAR growth
- Supply growth continues to be more constrained than demand growth and this should further aid hotel pricing power
See our Skift Research Global Travel Outlook 2024 for further sector-specific analysis on trends in the travel industry in 2024.