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Rate of Change: What’s impacting pricing in hospitality right now?

March 24, 2022


By Nicholas Armstrong
Senior Director, Product Management, Hotels, Meetings & Events, CWT

We’ve seen more fluctuation in hotel room rates than ever in a short space of time. After rising 3.5% in 2019, hotel prices fell 8.3% in 2020 and an additional 17.7% in 2021. The GBTA CWT Global Travel Forecast 2022 published late last year predicted a 13% rise in hotel prices globally in 2022, followed by a further 10% in 2023. Where testing and quarantine requirements have relaxed, bookings are booming. And as business travel gains momentum, higher occupancy and hotel room rates will follow.

Russia’s invasion of Ukraine has since sent shockwaves across the globe. Travel and hospitality brands, despite recovering from the impact of the pandemic, responded with trademark resilience and care, offering worldwide support and accommodation to victims of the invasion.

But the impact will be felt by a hospitality industry still in recovery. Further stress will be placed on global supply chains, raw materials, real estate, taxes and inflation will impact construction costs, labour, and services.

In a bid to return rates closer to pre-pandemic levels for business travelers, hoteliers will have to balance guest experience and amenities with a new reality of health, safety and cost.

Competition is heating up

Hoteliers will be under pressure to cater to business travelers. Competition is strong from serviced-apartment providers and sharing-economy players like Airbnb and Vrbo, and increases to average daily rates (ADRs) across markets will vary dramatically depending on local COVID restrictions. 

As for dealing with the fluctuation of average daily rates (ADRs) in the market place, travel managers should consult on the proper approach to find the right balance of content from key suppliers with third-party (aggregator) content when appropriate to drive savings for their programs.

Data makes the difference

While hoteliers continue to build new properties and lifestyle brands to cater to a pent-up demand for leisure travel, there will be an effort to return ADRs to pre-pandemic levels for business travelers. 

Market dynamics are highly variable and differ by market and scale (i.e., economy, midscale, and luxury). Consulting with experts on a data-driven approach to sourcing will be invaluable to travel managers and procurement professionals looking to optimize their programs in these strange times.