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Travel demand soars in Asia Pacific — hotel rates up

WorldAsiaTravel demand soars in Asia Pacific — hotel rates up
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Finding a great hotel deal can be more difficult than ever.

Hilton’s Asia-Pacific president, Alan Watts, said hotel rates are at an “all-time high”.Squawk Box Asia” on Thursday.

Rates are being driven up by travel demand, he said, referring to the pandemic, which is “a feast … to make up for the famine”.

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According to the earnings report, Hilton’s average daily rates increased 8% in the fourth quarter of 2022 compared to the same period in 2019. Similarly, Marriott and IHG raised prices by 13% each, while Hyatt’s daily rate increased by 14%.

That’s world class. Hotel rates are rising even more in parts of Asia Pacific.

Rates are skyrocketing in Asia

Watts said the travel boom in Asia Pacific has been “phenomenal”.

Data shows that this is especially true of the places Chinese travelers are visiting.

Average hotel rates across Southeast Asia are set to increase by more than 10% since 2022, according to data from travel booking company Traveloka.

But rates have climbed over 45% The places that are attracting the most Chinese travelerssaid Joydeep Chakraborty, chief strategy officer of the company.

“The most significant increases were recorded in Bali, Bangkok, Phuket and Singapore, with Bangkok topping the charts with more than 70% and Singapore with more than 40%,” he added.

cTrip, a major travel booking website in China, also told CNBC that average hotel booking prices in Bangkok increased by nearly 70% in late January.

Rises highest in high-end hotels

Traveloka’s data shows that hotel rate hikes are not limited to the luxury sector “but are more significant among high-end hotels,” Chakraborty said.

data shows Rising demand for luxury hotels among Chinese travelers. A report published on February 7 by Morgan Stanley showed Chinese travelers’ interest in luxury hotels increased from 18% to 34% from 2022 to 2023.

A report provided to CNBC by data identity company Samaira in late February showed that Chinese travelers are spending significantly more on hotel rooms. Fewer travelers booked rooms for under $100 a night, while the number of people who booked rooms priced at $400 or more nearly tripled, as shown here:

Additionally, international travel is largely limited to those able to pay airfares that are double or even triple in price. China’s surprise announcement of reopening – at a time of rising Covid infections across the country – Didn’t trigger airlines to increase flight connectivity with China To catch up with external demand.

The result was limited seats and skyrocketing fares. In March, United Airlines was charging nearly $4,000 in economy class and more than $18,000 in business class, for a return flight between San Francisco and Shanghai. according to reuters,

A shaky return to normal?

But there is also evidence that higher hotel daily rates may be short-lived – or perhaps follow an unsustainable path of sporadic fluctuations – as the travel industry in the Asia Pacific region attempts to return to normal.

Hotel prices across the region are trending upward, according to booking platform Kayak, yet some of the highest average hotel rates have already begun to drop.

It shouldn’t be surprising to see luxury hotel prices rise after mainland China reopens.

david mann

Chief Economist, MasterCard Economics Institute

The booking site found that average nightly hotel rates dropped by 36% in Bangkok and by about 33% in Singapore from January to February.

But comparing those same two months, average nightly rates rose 70% in Hong Kong and 73% in Tokyo, the company said.

A Kayak spokesperson told CNBC that this “overall demand” could drive up costs.

Good for Hotels, Tough for Travelers

“It should not be surprising to see luxury hotel prices rise after mainland China reopens to international travel,” said Mann, chief economist at MasterCard Economics Institute. , told CNBC, “especially for economies dependent on tourism like Thailand.”

He and Bansal compared the current state of the Asia-Pacific – as it attempts to rebound in light of China’s “relatively sudden, albeit anticipated, loosening of Covid restrictions” – to a bungee jumper reaching the lowest point of his fall. period after, and starts traveling upwards again.

they wrote: “After the initial rebound, a bungee jumper enters the disoriented bouncing phase when it is unclear whether the trajectory is towards the ground or towards the sky.”

— CNBC’s Charmaine Jacobs contributed to this report.

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