The traditional tourist hotspots in Europe and North America are packed this northern summer and hotel prices are now 20-50 per cent higher than in 2019. For a double room in Paris, London or New York City measuring at least 20 square metres in a decent three-star hotel in a central location, anything under $450 a night is a bargain. In peak season you’re pushing to find even a private room in a hostel for less than $200 a night. In Amsterdam, make that $350 a night.
Among several reasons for the increase in room rates, many hotels shed staff during the pandemic. Most of them haven’t returned to the industry, and hotels are having to pay more to attract receptionists, waiters, chefs and back-office staff to replace them. In Europe especially hotels are facing rising energy costs and paying more for food. Some small hotels took out loans or ran down savings to survive during the pandemic slowdown and those negative balance sheets need to be serviced.
The increased demand for rooms has not been met with an increase in availability as new hotel building projects have stalled, faced with higher interest rates and supply chain issues in the construction industry. Also, since January 2023 the Aussie dollar has been in slow melt against the euro, the US dollar, the British pound and other major currencies, and therefore more dollars are needed to pay for that hotel room.
In South-East Asia, the increase in room rates has been less severe. In Thailand, Vietnam and Indonesia hotel rates have been constrained due to the absence of Chinese tourists. Although those travellers are slowly returning, the numbers are not close to pre-pandemic levels as the Chinese economy stutters and flight capacity on routes between China and South-East Asian cities remains sluggish.
Chinese tourists are now more likely to travel domestically, and the younger generation is more world savvy and less enthusiastic for the group-tour slog that once typified the Chinese travel experience abroad.
