In this Lighthouse Live discussion, Lighthouse experts Blake Reiter and Daniel Foreman broke down the latest H2 2024 pricing data and provided a forward-looking analysis for H1 2025. This blog highlights the major takeaways, key regional trends, and what revenue managers should anticipate in the coming months.

H2 2024: Hotel pricing trends vary sharply across regions

Latin America leads global pricing growth

Latin America stood out as the best-performing region, with year-over-year hotel pricing increasing by 13.3% in H2 2024. The primary drivers behind this were:

• Higher disposable income among local consumers

• Accelerated interest rate reductions

• Strong inbound tourism possibly caused by favorable exchange rates

This combination of economic factors created a robust pricing environment, sustaining momentum from H1 2024.

Asia and Africa face setbacks

While Latin America surged, Asia and Africa experienced pricing declines due to a combination of factors:

• Diminished outbound Chinese travel, which significantly impacted neighboring Asian markets

• Geopolitical uncertainties in Africa, affecting tourism demand

• Extreme weather events, such as heat waves in Southeast Asia, that deterred travel

These challenges resulted in weaker hotel pricing performance compared to other regions.

The shifting balance between branded and independent hotels

One of the most significant trends from H2 2024 was the performance gap between branded and independent hotels:

• Branded hotels outperformed independents in every region except North America

• In Latin America, branded hotels saw pricing growth nearly 16 percentage points higher than independent properties

• Asia’s independent hotels saw prices drop by 14.7%, while branded properties maintained steady rates

In contrast, North America was the only region where independent hotels outperformed branded hotels, particularly in the luxury and ultra-luxury segments. Wealthier clientele insulated these high-end properties from broader pricing declines seen at the 3-star level.

H1 2025 Outlook: Cautious pricing, promising demand

One of the biggest surprises in the data is the contradiction between declining advertised rates for H1 2025 and strong demand indicators.

• Pricing for H1 2025 appears to be softening compared to actualized H1 2024 rates.

• Forward-looking demand indicators remain highly optimistic, driven by strong wage growth and economic stability in key regions.

Cautious optimism: pricing pressure despite demand growth

Hotels seem to be playing it safe by prioritizing occupancy over aggressive rate increases. This cautious approach is likely influenced by:

• Economic and geopolitical uncertainty

• A wait-and-see approach regarding Chinese outbound travel recovery

• A desire to start the year off on better footing than H2 2024 (pricing and occupancy)

The demand fundamentals, however, suggest potential pricing power later in 2025. Key indicators include:

• US wage growth of 4% (December 2024)

• European wages up 4.8% (May 2024, per ECB)

• Japanese base wages growing at their fastest pace in 30 years

• Strong Indian salary growth of 9.5% with a forecast for similar growth in the coming year

These trends indicate consumers will have more spending power, which could drive late-stage pricing improvements.

Short-term rentals: Diverging trends

While H1 2024 saw broad-based ADR increases for short-term rentals, H2 2024 brought more mixed results:

• Europe led global ADR growth, despite having the highest supply of short-term rentals

• The Middle East had the lowest occupancy (28%) and saw short-term rental ADR declines

• Oceania had the highest occupancy (59%) but saw ADR declines, a rare combination

The takeaway? Short-term rentals remain highly regionalized, and pricing power depends heavily on local market conditions, demand strength, and supply fluctuations.

Top performing hotel markets: Sun & value destinations win

The sun & sand effect continues

The demand for affordable leisure travel in warm destinations remains strong. Markets benefiting from this trend include:

• Thailand (Khao Lak, Krabi)

• Mexico (Cancún, Tulum, Mexico City, Monterrey)

• Spain & Portugal’s Atlantic Islands (Azores, Tenerife)

India’s rising momentum

India continues to be a growth leader, with strong pricing performance in Hyderabad, Chennai, and Bangalore.

• India’s wage growth (9.5%) is fueling domestic and international travel demand.

• Advertised rates for Jaipur, Mumbai, and Hyderabad are among the fastest-growing worldwide.

Chinese outbound travel: signs of a recovery?

• Chongqing, China, saw one of the largest pricing turnarounds, going from a weak performer in H2 2024 to a top performer in advertised pricing for H1 2025.

• Sapporo and Osaka in Japan, key destinations for Chinese travelers, are showing strong forward-looking rate growth.

If Chinese outbound tourism returns to 95% of pre-pandemic levels (as projected by Tourism Economics), expect major pricing upside in markets reliant on Chinese travelers.

Underperforming markets: Southeast Asia & the Mediterranean reset

Southeast Asia: A tough year

Two primary factors drove underperformance in Southeast Asian markets:

1. Weakened Chinese outbound travel

2. Last year’s extreme heat wave, which discouraged travelers making travel plans in early H2

Markets like Bangkok, Bali, and Ho Chi Minh City saw noticeable pricing declines.

Mediterranean “reset”

Once social media darlings in 2022 and 2023, overcrowded Mediterranean destinations like the Amalfi Coast, Corfu, and Menorca saw pricing declines as travelers shifted to less saturated destinations. Affected by over-tourism, these locales have dropped in popularity as travelers seek new, less mainstream alternatives, leading to pricing declines.

Final thoughts: 2025 is a year of strategic opportunity

Revenue managers should keep a watchful eye on shifting pricing trends and demand fundamentals as we move into 2025.

Key takeaways for hoteliers & revenue managers

1. Demand indicators suggest pricing upside potential, but rates are currently soft due to cautious hotel strategies.

2. Latin America remains the strongest performer, while Asia and Africa face headwinds.

3. Branded hotels are outpacing independents in most regions, except in North America’s luxury segment.

4. Short-term rentals are experiencing highly localized trends, making revenue management more complex.

5. Markets tied to Chinese outbound travel may see a rebound, presenting an opportunity for strategic pricing adjustments.

Looking ahead: How to prepare

• Monitor real-time demand data closely—don’t underprice too early.

• Capitalize on wage growth trends—if consumers have more spending power, pricing should follow.

• Adjust pricing strategies dynamically—stay agile in response to unexpected market shifts.

• Keep an eye on geopolitical developments—especially in Asia and Africa, where uncertainty remains high.

While pricing momentum may currently be cautious, demand fundamentals remain strong, setting the stage for potential upside as 2025 unfolds.

Stay tuned for the next State of Global Pricing Report, where we’ll break down H1 2025 actualized data and see if the cautious optimism translates into pricing power.