The pandemic sent hotel rates spiraling downward. Now that the world is traveling again, hotel rates are climbing back toward ‘normal.’
In the first half of 2020, the hotel industry took a big hit. The COVID-19 pandemic forced many hotels to close their doors. The ones that reopened did so with much lower hotel rates than Travel Managers were used to seeing.
But things are changing in 2021. A vaccine has become readily available to a large portion of the world. Travelers are starting to get on airplanes again. And hotel rates are steadily inching back toward where they were in 2019 before anyone had ever heard of COVID-19.
Here’s a look at what to expect from hotel rates in the next few months, plus a few good ideas Travel Managers can implement to capture savings.
Hotel Rates are Rising
In late June 2021, hotel rates were up 10% month-over-month. That may not sound like much, but 10% monthly growth in rates would put us right back where we were in 2019 before the end of the year. Tripbam released the data, and its CEO, Steve Reynolds, noted that the “trend line is steep” and that he doesn’t “see anything in sight that will slow that down.”
Snag Good Deals Right Now
While hotel rates are certainly on the rise right now, there are still good deals to be had. If you’re entering a negotiation season with hotel chains, now is the time to secure a contract for your Travelers — when you can still snag a good deal.
The middle of the pandemic was low tide for hotels around the world. Bookings were non-existent, and it was a buyer’s market for Travelers who needed to reserve rooms. What we’re seeing in 2021 is the slow rise of the tide. The only question is when it will reach the same level as before the pandemic.
Expect Volatility to Remain Low
Not only have hotel prices been low throughout the COVID-19 pandemic, they have also been volatile. Throughout 2020, COVID-19 cases would rise and then fall. Hotel rates would rise and then fall again along with the infection, hospitalization, and death rates. The entire travel industry was beholden to how well the fight against the pandemic was going.
The volatility has quieted down a little bit. Typically hotel rate volatility sits around 10–12%. Volatility is currently 16%, according to Tripbam. Reynolds expects volatility to “mellow out” around its normal rate toward the end of 2021.
2019 Prices Will Return in 2022
So, when will hotel rates return to normal, climbing back to 2019 levels? If the 10% month-over-month growth continues, 2019 rates will return by the end of the year. Steve Reynolds sees rates fully returning to normal levels by the first quarter of 2022 at the latest and we cautiously agree.
Which is even more reason to book travel as in advance as possible right now. If the trends continue through the end of the year, Travel Managers can still access marginal savings by booking now rather than waiting for the fourth quarter of 2021 or later — when experts expect hotel rates to normalize.
Save on Travel Spend Through JTB Business Travel
At JTB Business Travel, we understand that your company operates on a tight travel budget. That’s why we offer a series of services and programs designed to help Travel Managers like you reduce their overall travel spend. Behind everything we offer is a common-sense approach to business travel.
Contact us to learn more about how we can help your company save on its travel spend.