A snapshot of hotel room price trends: H2 2023 and H1 2024

In the second half of 2023, the hotel industry saw a slowdown in price growth.

This shift was largely due to the cooling off of the post-pandemic travel boom and the effects of tighter family budgets. Interestingly, the Middle East was the only region where average hotel room rates actually fell during this time.

Despite the general deceleration, some areas and industries showed strong performance. Specifically, hotels in Europe and short-term rentals in the Asia-Pacific region managed to stand out with their durability and growth.

As we gaze into the future, the hospitality industry must prepare for a potentially softer global lodging market in 2024. This forecast is mainly influenced by two factors: the pressure on discretionary spending from consumers and a slower-than-anticipated recovery in Chinese outbound tourism.

Europe leads the way for hotel pricing growth in H2 2023, as post-pandemic gains fade

In 2023, Europe stood out in terms of regional pricing growth.

The first half of the year (H1) saw a robust 11% year-over-year (YoY) rate growth, followed by a 10% increase in the second half (H2). This outperformance made Europe the top region for hotel rate growth, with room rates in H2 being 11% higher than in H1.

Chart showing year on year hotel room prices changes in each region

While each region apart from the Middle East saw a slight uptick in hotel room pricing, it is clear that the pace of these gains is slowing down.

Global slowdown is evident: Other regions exhibited a notable deceleration in hotel rate growth compared to the first half of the year:

  • Africa: Rates rose by 4% in H2, down from H1’s 5% increase.

  • Asia: H2 saw a 7% rise, a steep decline from the 19% surge in H1.

  • Latin America: Growth slowed to 4% in H2 from a robust 15% in H1.

  • Middle East: Rates dropped by 6% in H2, reversing a 17% rise in H1.

  • North America: A marginal 1% uptick in H2, cooling from an 8% increase in H1.

  • Oceania: 7% rise in H2, compared to a 19% hike in H1.

These numbers show a softening in demand across the global travel market, although the effect of slowing inflation also came into play.

North America: 2023’s priciest region for hotel stays

North America retained its position as the most costly region for standard hotel accommodations, with the average nightly rate exceeding $350, surpassing Europe’s average by over $100.

However, this does put price sustainability in question. The durability of these premium rates may be tested, particularly if consumer confidence and discretionary spending diminish in 2024.

Asia dominates H2 2023’s hotel price growth leaderboard

In the latter half of 2023, the leaderboard for hotel price growth was dominated by Asian destinations. Out of the top 20 spots, nine were claimed by Asia-Pacific locations, with six making it to the top 10.

Chart showing top 20 destinations for room price growth

One of the main drivers of this surge was the revival of international tourism, especially as countries like China and Japan lifted their remaining travel bans. 

This resurgence allowed hotels in cities such as Tokyo, Hong Kong, and Chiang Mai to substantially hike their rates, witnessing increases of 55%, 46%, and 39% respectively.

However, it's crucial to put these impressive gains into perspective. Many of these destinations are bouncing back from low starting points, having suffered extended downturns due to the pandemic.

To put the figures into context, when compared to 2019, hotel prices in some cities like Tokyo and Kyoto were still lower by 13% and 15% respectively. Furthermore, the number of tourists hasn't yet reached pre-pandemic levels in many Asian countries, including Japan, Thailand, and Indonesia.

India tops Asia’s rate risers list in H1 2024

As we head into 2024, an increasingly affluent Indian consumer is ready to splurge their rupees on travel.

Chart showing top 20 Asian destinations for hotel room price growth in 2024

The top six locations for price gains in H1 2024 compared to H1 2023 in Asia are all flying the Indian flag, led by Hyderabad (70%), Mumbai (40%) and Chennai (34%).

This level of positive price movement also puts these three Indian destinations into the top five global risers. India’s middle class appears to be emerging as an economic powerhouse, and the country’s domestic tourism industry seems set to reap the benefits.

Final thoughts

Overall, in the second half of 2023, the hotel sector experienced a slowdown in the growth of pricing. However, regional variations are clearly apparent and short-term rental prices outpaced the hotel market in Africa, Asia, Europe and the Middle East.

Consumers' steadfast dedication to travel and tourism as an essential activity in the post-pandemic era still remains and this may endow the hospitality industry with a distinct resilience, distinguishing it from other consumer sectors in 2024.

For more detailed pricing trends, you can refer to our latest report on the state of hotel pricing which looks into hotel and short-term rental rate patterns across the globe, providing invaluable data and analysis for hospitality industry professionals as we move through 2024.

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