Hotels Market Intelligence

Industry Outlook & Drivers

Global Market Outlook on Hotels

The global hotel industry is witnessing a lot of mergers and acquisitions. Sharing economy properties are also competing against many hotel properties across the world.

The global hotel industry is growing at a CAGR of 4.6 percent, and the 2016 revenue was estimated to be $550 billion.

Growth Rates

• 2010–2011 witnessed the highest growth (9.1 percent) between 2010 and 2015, driven by a 7.4 percent growth in the average daily rates
• 2012–2013 registered the lowest growth rate (2.1 percent), mainly due to low volume (ADR remained flat Y-o-Y)

Growth Drivers 

• The business travel segment is growing; increased role of internet and technology in making hotel bookings easier (e.g., mobile check-in/check-out)
• Expanding business in emerging market leads to increased growth in business travel and demand for hotels

 Constraints

• Supply shortage in emerging markets, alternatives to travel, like virtual meetings, are reducing travel and hence, the need for hotel bookings

Price Forecast: Hotels (2018)

Globally, a 3.7 percent average increase in hotel prices is expected in 2018 compared to 2.5 percent in 2017. Europe is expected to record a strong increase, while other regions are coping up with inflation. The impact of the 2017 mergers is expected to be felt during the 2018 RFP season.

Pricing Trends

North America

• As demand has levelled off since 2016, North American hoteliers may be banking on economic growth, but supply is expected to continue growing steadily through 2018

LATAM 

• Capacity is being added throughout the region between 2016 and 2025, which projects a 57 increase increase in supply
• Spend reduction is also a priority

Europe

• Hoteliers in Eastern Europe are optimistic, as 2017 statistics reflects occupancy picking up
• No measurable impact is expected from Brexit until 2019 in the UK
• RevPAR growth is expected for major cities in Europe

MEA

• In the MEA, Saudi Arabia is leading in construction of rooms, followed by Saudi Arabia, Qatar and Egypt

APAC

• Hotel prices are expected to rise with huge discrepancies
• Strong economies are driving the demand
• Buyers should be equipped to manage challenging negotiations with newly merged hotel groups

Regional Trends: Hotels

Suppliers are progressively moving corporate buyers away from fixed, negotiated hotel rates and toward dynamic rate pricing. There is also a global trend toward “smarter” hotels with advanced technologies.

North America

• Market: It is a seller's market for North American hotels, with rates up around 5–6 percent in 2016
• Growth: Demand is steady, but there is little new supply, outside mid-scale brands, like Hampton Inn and Courtyard
• Opportunity: There is a scope for more consolidation in the industry
• Alternatives: Serviced apartments and extended-stay properties, both of which include kitchen facilities, are gaining renewed interest as a compromise between hotels and Airbnb-style private accommodation offerings

LATAM

• Need for developed infrastructure: In spite of current challenges, LATAM still needs more high-end properties to meet the region's underlying demand. Local chains still provide most of the supply
• New openings: Recent new openings in countries, like Peru, Chile, Mexico and Panama, have been confined largely to mid-scale properties
• Upgradation: Existing hotels are upgrading their facilities, offering improved business centres and Wi-Fi
• Influx of new hotels: Major cities have experienced supply of new hotels, but due to economic uncertainties, the hotel market remains undersupplied in most cases