Hotels in Europe’s major gateway cities, at airports, and on urban peripheries are expected to show the strongest rate rises in 2022, but new Covid variant Omicron could derail forecasts of greater pricing stability in the year ahead.
Pricing data from Roomex paints a picture of softening autumn 2021 demand continuing into winter, but more confidence – and therefore rising hotel rates – in the early months of 2022.
In the UK and Germany it expects rate gains in the region of 15 per cent at hotels on urban peripheries, while domestic demand growth for the two countries in 2021 is expected to translate into more international demand in the year ahead.
In the first half of 2022 Roomex expects an “early and strong pickup in cross-border business travel”, with gateway cities such as London, Paris and Amsterdam seeing higher price increases driven by growing popularity of airport locations.
Rates in central Paris, for example, are looking relatively stable at €165 per night in January, but nightly rates in Paris airport locations have risen from €86 to €103 in January. Roomex says rising rates at airport hotels could be linked to more flight changes by travellers trying to cope with changing travel restrictions.
“It’s too early to consider what the pricing impact of the emergence of the Omicron variant will be,” said Keith Watson, Roomex VP of supply. “Case rates [in several European countries] were rising anyway, and this throws another significant variable into the mix.
“We do think our clients have learnt now how to manage their arrangements during periods of higher and lower restrictions and so we’re reasonably confident regarding domestic business travel and therefore rates. However, it [Omicron] is likely to slow further the return of international business travel.”
An additional variable likely to affect future rates, according to Roomex, is contrasting revenue management strategies from larger hotel groups. While some continue to focus on occupancy and therefore take a more aggressive pricing position, for others close management of distribution costs is more important. As the market starts to normalise, this won’t necessarily produce a higher rate peak but could see more prolonged periods of higher rates.