Indian cities top the list of high hotel prices, trend expected to continue

Hotel room rates in various major cities worldwide are anticipated to witness double-digit increases, defying earlier predictions that prices had reached their peak.

Indian cities are dominating the list with Mumbai, Chennai, and Delhi ranking in the top 10.

According to a recent report by American Express Global Business Travel, the Hotel Monitor 2024, hotel price fluctuations are upward in over 80 cities globally. The report takes into account factors such as current pricing, broader economic trends, hotel developments, and historical data to make forecasts.

The top 10 cities where hotel prices are expected to rise most significantly and the projected percentage increase compared to the previous year are Buenos Aires, Argentina (17.5%); Jakarta, Indonesia (10.9%); Boston, US (11.3%); Paris, France (11%);

Delhi, India (12%); Chicago, US (12.6%); Bogota, Colombia (14.1%); Chennai, India (14.6%); Cairo, Egypt (14.6%); and Mumbai, India (15%), reported Bloomberg.

These projections indicate that hotel prices in these cities will rise considerably, presenting challenges for travellers.

The reasons behind these price increases vary across cities.

In Buenos Aires, the hyperinflation crisis in Argentina has been a significant driver, with rates predicted to increase by 17.5%. Notably, this increase, when calculated in the local currency, may still result in savings for international visitors.

Mumbai, India's second-place ranking, is expected to see hotel prices rise by 15%. This surge is attributed to the country's rapidly growing domestic wealth and the delayed post-pandemic recovery in travel.

India features prominently in the list, with Chennai and Delhi securing the fourth and seventh positions, respectively, reflecting the nation's overall economic growth.

Other cities in the top 10 have experienced growth in tourism, such as Cairo, benefiting from leisure-driven travellers, and Chicago, Paris, and Boston, due to increased business travel.

However, several macro trends continue to influence hotel pricing globally.

Staffing shortages within the hospitality industry have led to some hotels limiting inventory, leaving rooms unsold, and spreading operating costs among fewer customers. The supply of hotel rooms in certain markets has not kept pace with demand, contributing to rate hikes.

Cities with moderate rate increases are predominantly located in Australasia, where no city is projected to experience an increase greater than 6.8%.

Price increases are expected in all 80 cities examined in the report. Factors like staffing shortages and supply and demand dynamics will continue to impact hotel pricing on a global scale.

David Reimer, Executive Vice President of Global Clients at Amex GBT, noted that while remote work has become prevalent, certain types of business travel, such as trade shows and small internal meetings, have exceeded 2019 levels.

These trends are expected to persist and are seen as the fastest-growing segment in corporate travel.

Despite the projected increases, some cities still offer favourable value for travellers.

For instance, a room at an upscale hotel in Buenos Aires during peak season may cost around $600 per night. Even with a 17.5% increase, this translates to just over $100 more. In contrast, a room in Paris at a luxury hotel during high season, currently priced at $2,000 per night, would see an 11% increase, equating to around $200 more, which is relatively higher in absolute terms.

Hotel prices are poised to rise significantly in various cities worldwide, impacting travellers' budgets and choices.