Consumer spending on travel has shown remarkable resilience, as people eagerly plan vacations to popular destinations around the world.
NB: This is an article from OTA Insight
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.
Subscribe to our weekly newsletter and stay up to date
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 rate 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.
