Luxury travelers are back and hungry to be pampered at luxury hotels and resorts around the world. Also Incentive Travel is back.
What is still behind, is whether business travelers are allowed to stay in 5 Star luxury hotels or are encouraged to use Zoom and other communication tools instead of getting on a plane to travel somewhere for a face-to-face meeting.
In summary demand for Luxury hotels in Europe was only 12% below the top 2019 numbers. Hotels in the Middle East already reached 2019 levels, and with China and Japan opening up for inbound and outbound travel, 2019 stats are expected to be exceeded. This new demand may indicate investing in new luxury hotels may become a profitable move.
According to a study by Costar, a real estate investment company, in the Americas, Europe, and the Middle East roughly six out of 10 rooms were occupied on average in 2022. In Asia, the results are much weaker, and on average over half the rooms were empty each night for the full year.
There is a bright light on the horizon. The stronger room demand has led to occupancy recovery across most global regions.
Higher demand is developing together with higher room rates. This is good news for hotel operators, but bad news for consumers.
The average daily room night rate increased about 30% globally, except for Asia.
High-end resort operators see little price resistance from luxury travelers willing to spend extra for ocean-view suites or connected rooms to allow multi-generational travel groups to be close.
The only bargain for a luxury vacation remains in Asia, where travelers pay less than in 2019 for hotels.
The average daily rate stands at over $300 in the Americas and MEA and over $400 in Europe. Asia trails in this category as well, with luxury rooms averaging only half as expensive as those in Europe. In some popular markets, such as New York, and Hawaii, hotels charge well over $1,000 per night.
Major European cities such as Paris and London registered very high ADRs and strong rates of growth since they have proven to be very attractive to American travelers when the U.S. dollar.
Dubai hosted some major events and continued to be a favorite destination for luxury travelers, but with new opportunities such as Saudi Arabia that opened up to mainstream and business travelers, this may be shifting soon.
According to the Costar report, an economic slowdown should only mildly impact high-end travelers as some are still looking to make up for travel time they lost over the last two years.
In addition, companies are expected to continue using high-end incentives and group trips to motivate staff, clients, and top performers.