NEW YORK, June 7 (Reuters) – Hotel room rates in the U.S. and Europe are rising and could become even more expensive as supply falls short of demand, industry executives said.
The availability of hotel rooms in the US is on the rise as tight lending from regional banks makes it difficult for developers to get financing, even as demand for travel has increased in the wake of the COVID-19 pandemic. This helps to keep prices high which officials say should have been reached years ago.
“We had a lot of growth over a long period of time which kept prices low,” IHG Hotels and Resorts ( IHG.L ) CEO Keith Barr said on Monday at the NYU International Hospitality Industry Investment Conference.
Supply is not expected to pick up significantly for the next year or two, he said.
The number of hotel rooms in the US rose by about 3% in April 2023 from 2019. About 153,000 hotel rooms were booked in April, down from a peak of 220,000 in the same month in 2020, according to hotel research firm STR.
“It’s just going to help prices stay where they need to be in the long run, which is good for the industry,” Barr said.
US hotel rates in May rose to $157.45 a night, up 17% from 2019. Rates fell to $73.25 in April 2020 during the pandemic and did not top $100 again until March 2021, STR data show.
“Given the significant recession and industry shutdowns in 2020, all of these prices seem crazy,” said Mark Hoplamazian, CEO of Hyatt Hotels (HN).
Middle and economy rooms now cost 15% to 20% more than before the pandemic, and the protests are ongoing, Accor ( ACCP.PA ) CEO Sébastien Bazin said at a conference.
“For the past 20 years hoteliers have not had the courage to bring back hotel room rates,” he said.
“Half of the hotels don’t ask for a price. They say ‘give me your best room.’
Bazin said that Paris hotel prices in the last six months cost 50% more than in 2019, while prices in London rose by 30% in the same period.
“There will be a ceiling,” said IHG’s Barr, but the industry isn’t there yet, he added.
Doyinsola Oladipo reports in New York; Edited by Richard Chang
Our Standards: Thomson Reuters Trust Principles.
