Finding an excellent hotel deal could also be harder than ever before.
Hotel rates are at an “all-time high,” Alan Watts, Hilton’s Asia-Pacific president, told “Squawk Box Asia” on Thursday.
Rates are being fueled by travel demand that’s like “a feast … to offset the famine,” he said, referencing the pandemic.
In keeping with earnings reports, Hilton’s average each day rates increased by 8% within the fourth quarter of 2022, compared with the identical period in 2019. Similarly, Marriott and IHG hiked prices by 13%, while Hyatt had a 14% each day rate increase.
That is globally. In parts of Asia Pacific, hotel rates are climbing even higher.
Rates in Asia are skyrocketing
The travel boom in Asia Pacific has been “phenomenal,” said Watts.
Data shows this is particularly true in places where Chinese travelers are going.
Average hotel rates across Southeast Asia have gone up greater than 10% since 2022, in keeping with data from the travel booking company Traveloka.
But rates have climbed greater than 45% in destinations which can be attracting essentially the most Chinese travelers, said the corporate’s chief strategy officer, Joydeep Chakraborty.
“Probably the most significant increase was recorded in Bali, Bangkok, Phuket and Singapore, with Bangkok topping the charts at over 70% and Singapore coming in at over 40%,” he said.
Ctrip, the leading travel booking website in China, also told CNBC that average hotel booking prices in Bangkok jumped by around 70% in late January.
Increases highest at high-end hotels
Traveloka’s data shows that hotel rate hikes are usually not limited to the luxurious sphere “but are more significant among the many high-end hotels,” said Chakraborty.
A report provided to CNBC by the information identity company Adara in late February showed Chinese travelers are spending significantly more on hotel rooms. Fewer travelers booked rooms under $100 an evening, while the number of individuals booking rooms that cost $400 or more nearly tripled, as shown here:
Moreover, international travel is basically limited to those that are in a position to pay for airfares which have doubled, and even tripled, in price. China’s surprise reopening announcement — timed as Covid infections surged across the country — didn’t trigger airlines to extend flight connectivity with China to capture outbound demand.
The result was limited seats and sky-high fares. For a return flight between San Francisco and Shanghai in March, United Airlines was charging nearly $4,000 in economy class and greater than $18,000 in business class, in keeping with Reuters.
A volatile return to normalcy?
But there’s also evidence that prime hotel each day rates could possibly be short-lived — or perhaps follow an undulating path of sporadic rises and falls — because the travel industry in Asia Pacific attempts to return to normal.
In keeping with the booking platform Kayak, hotel prices across the region have been trending upwards, yet a few of the highest average hotel rates have already began to fall.
It shouldn’t be surprising to see an increase in luxury hotel prices following mainland China’s re-opening.
David Mann
chief economist, Mastercard Economics Institute
The booking site found average nightly hotel rates dropped 36% in Bangkok from January to February, and in Singapore some 33%.
But when comparing the identical two months, average nightly rates rose 70% in Hong Kong and 73% in Tokyo, the corporate said.
This might indicate “overall demand” could possibly be driving up costs, a Kayak spokesperson told CNBC.
Good for hotels, tough for travelers
Price hikes are helping hotels recoup substantial losses from the past three years and have the potential to “drive further growth,” said Traveloka’s Chakraborty.
But what hotels view as “growth,” travelers may even see just one other hit to the wallets, that are already being pummeled by rising costs of living and inflation.
But double-digit price increases may not faze Chinese travelers, who aren’t being squeezed by the identical market forces. Inflation in China has stayed relatively contained compared with the West, with consumer price inflation by year-end expected to be only modestly higher than the two% year-over-year average seen between 2013 and 2019, in keeping with a post on Mastercard Data & Services last month, authored by economists David Mann and Anushri Bansal.
“It shouldn’t be surprising to see an increase in luxury hotel prices following mainland China’s re-opening to international travel, given its role pre-pandemic as the largest source of outbound tourist spending globally,” Mann, the chief economist at Mastercard Economics Institute, told CNBC, “Especially for economies reliant on tourism, resembling Thailand.”
He and Bansal likened the present status of Asia-Pacific — because it attempts to rebound in light of China’s “relatively sudden, albeit anticipated, loosening of Covid restrictions” — to the period after a bungee jumper reaches the bottom point of the autumn, and starts to travel upwards again.
They wrote: “After an initial rebound, a bungee jumper enters a disorienting bouncing phase when it’s unclear if the trajectory is groundward or skyward.”
— CNBC’s Charmaine Jacob contributed to this report.