European hotel prices continue rising this summer

Global hotel prices have continued to accelerate this summer led by higher rates in Europe, according to the latest data from hotel analyst STR.

Worldwide average daily rate (ADR) rose by 6.3 per cent in July compared with the same month last year, with prices in Europe seeing an even bigger year-on-year rise of 13.4 per cent during the month. 

Although this level of year-on-year increase in European hotel prices was lower in percentage terms compared with 2022 and earlier in 2023 illustrating that rate rises may finally be stabilising. Travel management company CWT is already predicting “more moderate” price rises in 2024.

Investment firm Jefferies, which has analysed STR’s latest figures, said that France had seen “exceptionally strong price-led growth” during July, with ADR up by 87 per cent over pre-Covid levels. Prices in France were also up by 36 per cent compared with July 2022.

Overall ADR for hotels across Europe was 47 per cent higher last month than in July 2019, including rises of 51 per cent in Italy, 31 per cent in the UK, 30 per cent in Spain and 18 per cent in Germany. Year-on-year increases in ADR were more modest in July at 6 per cent in both the UK and Spain, and even lower in Germany at just 3 per cent. 

Jefferies noted that Europe’s hotel sector was now the “most recovered” compared with other regions, although occupancy in Europe remains stubbornly below pre-Covid levels – July’s occupancy was still 3.9 percentage points lower than in July 2019 and only up by 0.7 points on July 2022. Globally hotel occupancy has “plateaued at 2-3 percentage points” below 2019 levels, added Jefferies. 

STR’s figures show that Asia Pacific saw the strongest year-on-year growth in terms of revenue per available room (revpar), which was up by 36 per cent in July, while the Americas is seeing the least growth in revpar compared with 2022 – up by only 1 per cent on July 2022.

This is not surprising given the reopening of China and other major destinations in the Asia Pacific region earlier this year, while the Americas saw one of the fastest post-pandemic recoveries.