Hotel Rates Projected to Jump in 2023 Due to Rising Meetings Demand

Here are some excerpts from Daily Lodging Report from the past week. If you’re not a subscriber, you should be. Get news on hotel deals, development, stocks, and career moves. Sign up here.

Sunday, October 2, 2022

A new American Express Global Business Travel report suggests hotel rates worldwide will increase again in 2023 thanks to pent up demand for in-person meetings. They expect the rate of increase to be lower than in 2022 due to the economic climate. The report highlights rising hotel rates due to inflation and the challenge of increased corporate and leisure demand. The report also flags hotel efforts to recoup income losses from the pandemic exacerbated by rising labor costs, the combination of which will be challenging to corporate hotel program managers, some already struggling to secure accommodations and discounted rates.

Skift Note: U.S. companies were already were planning to cut business travel budgets due to inflation.

Monday, October 3, 2022

Indian Hotels and other hospitality firms in India have said they are eyeing price rate hikes. IHCL recently went back on that, saying the price hikes will have to wait until November. IHCL’s CEO believes they need to wait to see if the 3rd quarter momentum is going to carry into the Festive Season and raise rates going into the final two months of the year. They are confident that as long as demand continues to outpace supply, hotels will continue to have strong pricing power, particularly in major metros.

Marriott International announced it signed an agreement with Suzhou Jingyuan Hotel Management Co Ltd to bring the AC Hotels by Marriott brand to Greater China.  Expected to open in December 2022, the 135 room AC Hotels by Marriott Suzhou will sit at the heart of Suzhou. The hotel will include a mix of dining options including the brand’s signature AC Kitchen and AC Lounge & Bar. The hotel will also feature flexible spaces, including an AC Store, 24 hour fitness center, a meeting room and a laundry room. Marriott International currently operates 15 hotels across eight brands in Suzhou.

Naya Homes has secured $5 million in funding to grow its vacation and short-term rental platform in Mexico.  Naya began operations in Puerto Vallarta in August and said with the funding, they will launch in Mexico City with a 15 unit building in Polanco in September. The funding round was led by Flybridge Capital Partners with participation from Primary Venture Partners, Clocktower Technology Ventures, K50 Ventures, Carao Ventures, Trip Ventures, Colibri Equity Ventures, Derive Ventures in addition to several former executives from Uber’s Latin America unit.  Naya Homes has two former Uber staffers on the founding team.

Skift Note: Mexico City has attracted a growing number of U.S. remote workers, which threatens to increase its already large wage gap.

Tuesday, October 4, 2022

Marriott International announced the signing of an agreement with Yuexiu Property to bring its Ritz-Carlton brand to downtown Wuhan in China. The hotel is expected to open at the end of 2024. The Ritz-Carlton, Wuhan is expected to occupy the upper levels of The Yuexiu Global Financial Center T5 Grand A Office Tower, a 330 meter tall skyscraper in Wuhan’s traditional city center of Hankou. The hotel’s lobby, ballroom, meeting rooms, and certain F&B facilities will be housed in another three lower levels of the same building. The guest rooms are slated to feature panoramic views of the urban city, nearby Xinhua Stadium and Zhongshan Park as well as the Yangtze River. The hotel is expected to feature 205 rooms and suites and four distinct culinary venues, including a lobby lounge. Plans also call for an anticipated Club Lounge, a signature Ritz-Carlton Spa with a fitness center and a swimming pool, and a total of 1,130 square meters in event space, including a 680 square meter ballroom.

Nearly all hotels are experiencing staffing shortages, according to a new member survey conducted by the American Hotel & Lodging Association. 87% of survey respondents indicated they are experiencing a staffing shortage, 36% severely so. The most critical staffing need is housekeeping, with 43% ranking it as their biggest challenge. These numbers are slightly better than in May. Hotels are offering potential hires a host of incentives to fill vacancies such as: increased wages, greater flexibility with house and expanded benefits, yet 91% say they are still unable to fill open positions. According to the U.S. Bureau of Labor Statistics, as of August, hotel employment was down by nearly 400,000 jobs compared to February 2020. Hotels are looking to fill many of the jobs lost during the pandemic, including more than 115,000 hotel jobs currently open across the nation. These staffing challenges are resulting in historic career opportunities for hotel employees. National average hotel wages for 2022 through June are more than $22 per hour, higher than any other year on record.

Skift Note: The ongoing staffing shortages have forced hotels to devise new methods to attract workers.

Wednesday, October 5, 2022

Pebblebrook Hotel Trust announced that several of the Company’s resorts were impacted by Hurricane Ian, however, the Company does not expect the costs to repair and remediate damage from the storm to be material. The 189-room LaPlaya Beach Resort & Club in Naples, FL will remain closed as the Company completes a full review and assessment of the damage to the condition of the property, which contains four buildings, including two on the Gulf of Mexico. The Company and its operator, Noble House Hotels & Resorts, are already working diligently to assess the property and its systems. The 119-room Inn on Fifth, also in Naples, FL, reopened on October 1, 2022. The Company’s remaining five other hotels and resorts in southern Florida and Georgia impacted by Hurricane Ian are open and operations. The Company believes that the cost to repair any property damage at any of these properties will not be material. 

Hilton Grand Vacations announced the grand opening ceremony for The Beach Resort Sesoko, a Hilton Club, the second Hilton Grand Vacations resort to open in Japan. The resort is located on Sesoko Island, a remote island off the western coast of Okinawa. The grand opening ceremony takes place a year after the resort open to owners and guests. Hilton Grand Vacations now has a significant business base in Japan with nearly 70,000 owners in the country. The property features a modern twist on the rich heritage of Okinawa and is located near the Naha Airport. All 140 rooms, including studios, one, two and three bedroom suites) have ocean views, private balconies, and are equipped with full kitchens and washers/dryers in the unit.

Skift Note: The new resort’s opening comes just ahead of Japan restoring visa-free entry for independent travelers from October 11.

Thursday, October 6, 2022

The Economic Times reported on the comeback of “big fat weddings” in India. The article referenced tremendous pent up demand following two years of Covid-induced lockdown and curbs leading to the resurgence of big, fat Indian wedding festivities. The Fairmont Hotel in Jaipur, for instance, is almost sold out from October end until February due to the influx of weddings, reporting on bookings from all over India. Rates are up 35% from pre-Covid days. Lemon Tree Hotels said they are expected the best wedding season for the sector in many years.

Marriott International, Inc. announced plans to debut the Fairfield by Marriott brand in Europe and the Middle East by late 2023. Anticipated openings across Europe and the Middle East include: Fairfield by Marriott Copenhagen North Harbour, Denmark expected to open in Q3 2023 with 234 guestrooms. The 175-room Fairfield by Marriott Amsterdam Schiphol Airport, Netherlands is expected to open Q3 2023. Expected to open in Q2 204 is the 123-room Fairfield by Marriott Zug, Switzerland. In Q4 2024, the Fairfield by Marriott Bordeaux Train Station, France is expected to open with 191 guestrooms. The Fairfield by Marriott Makkah Al Naseem, Saudi Arabia is expected to open in Q1 2025 with 2,600 guestrooms and the 1,376-room Fairfield by Marriott Makkah Ibrahim Al Khalil road, Saudi Arabia is expected to open Q4 2025 as the second Fairfield property in Makkah. 

Skift Note: Saudi Arabia is the Middle Eastern country with the largest number of projects in the hotel construction pipeline.