Global hotel room rate trends: A spotlight on Europe and Asia

In the first half of 2023, the global hotel industry has experienced steady growth in Average Daily Rates (ADR), indicating a positive trend, with Europe and Asia now at the forefront.

Setting the scene

Encouragingly, all global regions have witnessed an increase in hotel rates compared to the previous year, reflecting a widespread continuation of spending growth in the global tourism and travel market. Moreover, with the exception of Africa, all regions have surpassed pre-pandemic levels in terms of average non-inflation adjusted rates offered by hotels.

When accounting for inflation, North American properties have comfortably exceeded their 2019 pricing levels, thanks to robust consumer spending on services. Non-adjusted prices are now nearly one-third higher than they were three years ago. A similar upward trajectory can be seen in Oceania.

In Europe, prices in the first half of 2023 have just surpassed inflation-adjusted rates, painting an exceptionally positive outlook for the entire year.

However, some regions still grapple with the lingering effects of disruption. In Asia and Africa, room prices, when adjusted for inflation, remain below the levels seen in 2019. On average, a typical room in Asia is priced just 6% higher than in the first half of 2019, measured in nominal US dollars.

Nevertheless, the situation in Asia is gradually improving as travel barriers are lifted. In the first half of 2023, the region experienced a remarkable year-on-year growth rate of over 19%, making it the best performing region.

The growing confidence in travel and the ability to embark on international journeys is expected to sustain this positive trend in the second half of 2023.

Travel heats up in the Mediterranean

The first half of 2023 has witnessed strong performance in European rates and search volumes, indicating a rise in demand.

This upward trend is particularly evident in Southern European destinations, where prices are soaring in various picturesque Mediterranean locations. Notable examples include the Algarve (+84%), Ibiza (+67%), Santorini (+65%), Benidorm (+65%), Sorrento (+47%), and Mallorca (+43%).

These destinations are enjoying both continuous growth throughout 2023 and substantial improvements compared to 2022.

Europe's success can be attributed to its most prominent sun and sand tourism destinations. Moreover, instagrammable Italian destinations such as Lake Garda, Florence, and Rome have also experienced high demand.

Asia’s travel recovery continues apace

Asia has faced challenges in terms of pricing growth over the past two years due to travel restrictions and consumer uncertainty. Notably, Japan and China, two major markets, only recently lifted controls on tourist movements.

As these restrictions have eased, confidence in travel plans has been restored, and several of Asia's most popular destinations are quickly surpassing their 2019 pricing levels after years of underperformance.

The destinations with the most significant year-on-year gains are among Asia's favourite pre-pandemic international tourist spots, indicating a preference among travellers to return to familiar and trusted locations.

Japan, Thailand, and Indonesia dominate the top 20 countries for year-on-year price growth in the first half of 2023. Major cities in Japan and Thailand, as well as multiple locations in Bali, have shown strong performance.

The influence of Chinese tourists is undeniable in these trends. Hong Kong, for example, has witnessed a nearly twofold increase in prices from the previous year, as Chinese tourists gravitate toward trustworthy destinations, often constrained by limited flight routes.

Interestingly, Taiwanese destinations have not experienced the same boost in 2023, as Chinese travellers tend to shy away from the island. As a result, prices in locations such as Kaohsiung and Taichung have declined.

In summary

Consumers maintain a strong desire to spend on travel and tourism, prioritising well-known and trusted destinations associated with leisure travel.

The intent for leisure travel remains robust overall, and if this trend continues throughout the remainder of 2023, international travel levels are likely to return to pre-pandemic norms.

For more detailed global pricing trends, you can refer to our latest report on the state of hotel pricing which looks into rate patterns across North America and the continued rise of short-term rental accommodation.