Hotel Monitor 2020

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HOTEL MONITOR REPORT 1 Global Business Consulting

WHO WE ARE WELCOME TO THE HOTEL MONITOR 2020

American Express Global Business Travel and Expense This report, analyzing factors that could Technology is a major theme for the Travel (GBT) is the world’s leading (T&E) Management: impact how you buy hotels, is produced Hotel Monitor 2020: digital innovation business partner for managed travel. by the Global Business Consulting (GBC) is driving change across the hotel Analyzing and benchmarking clients’ The Global Business Consulting (GBC) team at GBT. landscape, creating new opportunities T&E processes. Managing T&E projects team at GBT works with companies and to drive savings and improve the related to online booking tools (OBTs), organizations to create travel programs The Hotel Monitor 2020 is based traveler experience. Underlining the expense environments, card payment tailored to achieve specific goals. Our on a custom-built model combining growing role of technology in corporate solutions, integration between client extensive capabilities and results- seven years of historical booking data lodging, GBC’s new Hotel Lobby systems and GBT systems. Optimizing oriented approach allow us to build and from GBT’s proprietary data lake with platform uses the latest AI and data the T&E environment based on implement strategies that streamline macroeconomic indicators and hotel technology to deliver strategic analytics agreed KPIs, supporting clients with processes, deliver savings, improve industry data, including occupancy and provide greater transparency and maintenance of T&E tools. compliance and reduce risk. rates and room yield data. The model’s forecasting capabilities. findings are validated by GBT’s global Business Intelligence (BI) We base our approach around six network of subject matter experts. To help you understand how the fast- and Data Advisory: strategic consulting solutions that help evolving technology landscape could clients implement a best-in-class travel Providing differentiated insight plus Across much of the world, the hotel impact your program, in the following management program: actionable recommendations by industry is booming. Business and pages GBC consultants spotlight five key analyzing client travel behavior and leisure volumes are growing, even as trends to watch. The Monitor concludes Supplier Management – Air, performance using GBC’s proprietary international trade tensions continue to with advice for travel buyers on how Accommodation, Ground Transport: analytics, GBT’s rich supply of T&E dampen the economic outlook. A healthy they can use data insights to optimize data, and powerful BI and visualization global hotel construction pipeline will their lodging program. These topics Detailed analytics to evaluate your travel tools. Through data advisory, we can mean, in most cities, hotel rates remain are explored in more detail in the white program with Key Performance Indicator help clients make informed decisions stable or see only modest rises. paper which accompanies this year’s (KPI) reviews of your supplier contract in their travel management activities. Monitor: Putting data to work for your management, travel spend, traveler We utilize the datasets available to us One interesting trend for traveler lodging program. behaviors, policy compliance and more. to identify behavioral trends, enhance behavior in many regions, observed by traveler experience and generate GBT local experts: modern business Corporate lodging is a large and Change Management: savings, delivering value throughout travelers are increasingly looking complex topic, and we can only scrape Advising on strategy, predictive analysis the organization. for lodging options that offer shared the surface here. For strategic advice, of impacts linked to expected changes, working spaces and a more relaxing configured for your travel program, communication, program design and GBC Travel Program Management: environment. In response, hotel brands please get in touch with our Global training plans. Piloting implementation are investing in lifestyle formats that feel Business Consulting team. Clients benefit from an experienced, of change programs, including less corporate. single point of contact to provide a organization, technology and processes. Joakim Johansson holistic, strategic approach; driving day- Vice President, to-day activities with project ownership, Program and Process Optimization, Global Business Consulting operational support, escalation Policy Design and Review: management and process improvement, Assessment and benchmarking of deploying savings opportunities and deployed end-to-end travel processes, efficiency initiatives. including mission order, booking, validation process and accounting For more information, visit: h t t p s: // interface. Project management and www.amexglobalbusinesstravel. “Digital innovation is driving change across the integration support when implementing com/corporate-travel-services/ new technology solutions, such as single global-business-consulting/ hotel landscape, creating new opportunities to drive sign-on and HR feeds. savings and improve the traveler experience.”

2 AMERICAN EXPRESS GLOBAL BUSINESS TRAVEL ‘‘ ’’HOTEL MONITOR REPORT 3 Key 2020 City Hotel Rate Predictions

London +1% Seattle +2% Munich 0% New York -3% Tokyo +4%

Atlanta +1% Shanghai +2% Dubai 0% Mexico City +3%

Bogota +4% Bangkok +2%

0

Sao Paulo +5%

Santiago +4% Johannesburg +4% Sydney­ +1%

Source: GBT Note: All forecasts are in local currencies

4 AMERICAN EXPRESS GLOBAL BUSINESS TRAVEL HOTEL MONITOR REPORT 5 Technology Trends

Revenue management

As room rates flatten and traditional revenue Technology is driving change across • Booking via the OBT can trigger growth comes under pressure, hotels are every area of corporate lodging, from pre-trip approval requests for becoming more creative in how they drive sourcing to the traveler experience. trips to high-risk destinations. And yields. Over the last couple of years, hotels Here, the GBC team identifies five travelers can be mandated to book have been heavily focused on driving direct specific areas where technology is only security-approved hotels in bookings, which can offer higher profits. reshaping corporate lodging, and looks these destinations – the OBT can be This trend will continue, with hotels offering at how organizations are responding. configured to only display improved mobile apps or booking platforms these properties. and extended loyalty member perks, Artificial Intelligence (AI) including tech-enabled personalization (for • Travelers need to understand why example, setting up rooms according to the Hotels are investing in AI to help drive their safety relies on using the traveler’s preferences). value and differentiation for corporate approved channels to book travel. If travelers. AI-based technology is being they go off-channel, the organization In addition to powering loyalty programs, deployed throughout the guest journey. cannot locate the traveler or their evolving technology is enabling hotels to Ahead of booking, guests can visualize itinerary. Booking policy-compliant upsell value-added offerings across all hotel rooms through augmented hotels via the OBT can also help stages of the client experience. Hotels reality. They can check in using facial address security concerns for are also making use of improved data and recognition and, during their stay, be groups potentially at risk in certain revenue management tools to clearly define looked after by robot-concierges who destinations, for example LGBT+ client booking patterns, and develop more respond to voice-activated commands. or solo female travelers: as well sophisticated revenue optimization models AI allows hoteliers to meet the modern as offering only security-vetted that go well beyond volume and industry business traveler’s need for personalized properties, OBT bookings can share. As a result, travelers may find it harder service: using pattern recognition, hotels trigger notifications about what to book their negotiated rates, particularly can anticipate guests’ requirements information and advice on these in compacted regions, and hotels are and provide more responsive service. destinations are available. increasingly pushing for dynamic pricing. However, hotels must keep in mind the With this approach, hotels give corporates balance between greater functionality Cancellation policies an agreed discount off their best available and guest data-privacy protection. In an effort to counter elevated rate. While dynamic pricing is often more cancellation rates often associated with expensive than negotiated rates, it can The growing scalability of data the use of online travel agents (OTAs) be useful when corporates have ad hoc processing, machine learning, and re-shopping tools, many hotels requirements or when volumes in particular computer vision, object recognition and have implemented tighter cancellation locations do not warrant a fixed price. unsupervised learning will offer hotels policies, such as 72-hour advance speed and cost reductions to offer notice requirements. Guiding traveler decision-making differentiated products in the medium to long-term. Today’s travelers are tech savvy and Hotel groups say this change is accustomed to managing travel on their necessary to reduce the impact of OBTs supporting duty of care own. They feel comfortable researching no-shows and open up more inventory and selecting their travel or hotel options The OBT plays a key role in driving travel to generate revenues. But it does based on peer reviews and ratings. Driving policy compliance and supporting an not support many companies’ travel policy adherence may require a shift from organizational culture of traveler safety patterns. Buyers should look to compulsion to reward and education. Look and security. Educate your travelers on negotiate more favorable cancellation for tools, such as GBT’s Trip Recommender™, the safety benefits of booking approved policies during the RFP process. that actively incorporate traveler preferences hotels via the designated OBT. These into creating intelligent, personalized include: offerings. Also, consider how chatbots • Any hotel included in the program For in-depth expert advice on how you and AI-powered messaging can create a is vetted during the selection can use data to optimize your program, simplified, customized booking experience. process via mandatory safety download our white paper here. Technology can also help highlight the value and security questions. and cost of booking decisions to the traveler: for example, by incorporating pricing intelligence into the booking process, you can help the traveler save time and money in their booking decisions.

6 AMERICAN EXPRESS GLOBAL BUSINESS TRAVEL HOTEL MONITOR REPORT 7 KEY CITIES Room rate forecast: North America

-4% -2% 0 +2% +4% +6%

Atlanta North America +1%

Boston +1%

Chicago +5%

Houston Atlanta 1% New York -3% 0%

The forecasts for North Home to multiple major brand hotels, Several factors point to room rate Los Angeles +1% America are set against Atlanta as a whole should see minimal decreases in New York through 2019 New York the background of an rate rises. That said, the city’s Perimeter – 2020. The city is already seeing -3% expected global economic area, where low supply growth is occupancy rates, RevPAR and ADR slide. San Francisco slowdown in 2019, with growth matched with solid demand, could see Increased supply, with the addition of up +4% accelerating again in 2020.1 prices rise by 2.5-3%. to 29,000 rooms in the coming months, plus a softening city economy in 2020, Seattle +2% Overall, the region should see Boston 1% will see room rates decline further. Toronto minimal rate increases in 2020. +4% Despite falling occupancy, Boston In the US, flat occupancy and a Among the new adds will be the world’s saw slight growth in Average Daily Vancouver full pipeline of rooms in tallest modular hotel. The AC Hotel New +3% Rate (ADR) in 2018 – 2019. This trend construction will drive York NoMad will be constructed from will continue into 2020, driven by Washington, DC +3% competition and limit the ability prefabricated modules built in Poland. It consolidation and the major hotel of hotels to raise prices. Rate is expected to open late 2020. brands setting revenue-increase goals. Source: GBT rises are more likely in Canada, thanks to a relatively strong Influenced by the growing millennial Chicago 5% economic performance and cohort of business travelers, Seattle 2% Vancouver 3% Washington, DC 3% slowing capacity growth. In terms of hotel occupancy and corporations continue to explore non- The fastest growing city in the US, home The Vancouver economy continues to Revenue Per Available Room (RevPAR) traditional lodging options, including The majority of hotel business in to leading technology and Fortune 500 expand, which is expected to support Look out for major hotel brands, growth, Chicago is one of the best shared lodging and hotels that offer Washington, DC, is driven by the federal companies, and a significant leisure hotel rate rises of 3%. such as Hilton, seeking to performing cities in North America. innovations including “grab and go” government, followed by tourism. destination, Seattle is gearing up to change pricing strategies, with Corporate relocations, attracted by breakfasts, mobile apps for check-in and Occupancy is largely determined welcome more visitors. The city is Watch out for developments on multi-year contracts, off-cycle a low cost of living, strong talent pool room key, and communal work spaces. by changes in government policy, expanding Seattle-Tacoma International non-traditional lodging: Vancouver has sourcing outside the traditional and Chicago’s geographically central national events and the electoral cycle: and ten hotels are in development, which launched a number of initiatives that RFP period, and dynamic pricing, location, will continue to drive demand occupancy levels and ADR fell during San Francisco 4% together will add around 3,000 rooms to may curtail the expansion of Airbnb in where prices adjust continually and push rates upwards. the government shutdown between Room rates are predicted to rise in San the city’s bed stock. A further 21 hotels the city. In a first for Canada, Airbnb as the balance shifts between December 2018 and January 2019. supply and demand. Other Francisco, as employment continues are at the planning stage. has been required to collect provincial Houston 0% to expand, albeit at a reduced rate, and sales taxes on all short-term rentals, as chains are starting to follow suit Corporate transient travel competes The period 2018 – 2019 saw a steady visitor numbers grow. Following the Despite expected economic activity, well as municipal and regional taxes. with similar pricing strategies. with a strong leisure sector. With increase in Houston’s hotel capacity, as re-opening of the vast Moscone Center supply growth will prevent rates from In 2018, Vancouver passed a rule that Amazon scheduled to start moving into Many hotels will harness new new properties opened downtown and convention and exhibition complex in rising faster than the forecasted 2%. restricted Airbnb rentals to principal its Arlington, VA, facilities late 2020, technologies, processes and in the city’s rapidly expanding suburbs. January 2019, occupancy rates are One factor that could raise hotel costs residences and required that operators Washington, DC, could see an increase performance metrics to optimize The arrival of additional rooms means expected to rise after a decline in 2018. and push up hotel rates over time: be licensed. As of March 2019, the city in rates. housekeeping costs and drive rates are likely to remain unchanged even Seattle’s tough labor laws require reported that only 55% of listings were savings: these have the potential as recovering oil prices drive up demand. After several years without major employers to set schedules 14 days in abiding by this rule. 2 to decrease rates as operational openings, San Francisco is welcoming advance and offer more hours to current expenses fall. Technology will Los Angeles 1% three new hotels through 2019, adding employees before hiring new staff. also increasingly shape the more than 625 rooms to the city’s bed While Los Angeles has been guest experience, as hotels stock, with a similar amount expected in experiencing strong GDP growth, hotel Toronto 4% introduce self-service kiosks, 2020. Despite the capacity boost, rising occupancy in 2018 was 80%, decreasing With one of the fastest expanding keyless entry and online occupancy will see rates rise. year on year in part due to the addition economies in Canada, driven by the check-in via mobile apps. of nearly 2,000 rooms. Capacity will finance, communications and life continue to increase through 2019 and sciences sectors, hotel rates are into 2020, with openings from brands forecast to rise by up to 4% as demand including Fairmont, Park Hyatt, Edition grows. Another upward influence on and Thompson. It will take time for room rates: the introduction of the

0 occupancy levels to stabilize. At the city DOWNLOAD THE FULL Municipal Accommodation Tax in 2018, level, median ADR is likely to increase CITY FORECAST HERE which has added 4% to guests’ bills. due to the new supply being heavily oriented towards luxury and upper- Around 40 hotel construction projects are upscale. But at an individual property underway, which will add more than 5,200 level, ADR growth could be minimal. rooms to the city’s stock, but this is not expected to dent the forecast rate rises.

8 AMERICAN EXPRESS GLOBAL BUSINESS TRAVEL HOTEL MONITOR REPORT 9 KEY CITIES Room rate forecast: Latin & Central America

Central & Latin America 0 +5% +10% +15% +20% +25% +30% +35% +40% +45%

Bogota +4%

Buenos Aires +47%

Mexico City Bogota 4% Buenos Aires 47% +3% Colombia is forecast to experience Financial turbulence in 2018 saw a Concerns about political Monterrey, MX +5% and economic uncertainty strengthening economic growth in 2019 50.6% depreciation of the Argentine through to 2021, as lower corporate peso, a strong reduction in government have had a negative Rio de Janeiro +1% impact on business travel in taxes boost investment, and are in turn expenditure and double-figure inflation. expected to drive up demand.4 The economic context remains volatile, Central and Latin America. Santiago +4% Nonetheless, price rises are and Argentina’s GDP is expected to In response to an inbound tourism contract further through 2019.6 forecast across the region as Sao Paulo +5% demand outpaces growth. At the boom, almost 4,000 rooms are in beginning of 2019, the hotel construction across the country, The forecast change in room rates Source: GBT construction pipeline had been representing more than 7% of existing is mostly due to inflation. That said, 5 contracted by more than 25% supply. The significant growth of new demand remains strong with occupancy year-on-year.3 inventory has kept occupancy low, at 73.6% YTD in Buenos Aires (vs. particularly in Bogota. 63.3% for the country as a whole). In fact, Buenos Aires experienced Rio de Janeiro 1% Travel buyers should note that Bogota its highest January occupancy since Occupancy in Rio is a healthy 63.8% is rated “concerning” for traveler safety 2012, due in part to a lack of new rooms YTD, and this number has risen strongly in BTN’s Corporate Travel Index for entering the region. ADR growth in year-on-year. However, hotels have the Americas. Buenos Aires has outpaced the rest of little scope to increase rates. The 2016 the country by double-digits and should Summer Olympics and 2014 FIFA World continue to do so. Cup created a massive supply increase in Brazil’s key cities. Rio alone saw 10,000 Mexico City 3% rooms added for the Olympic games. 0 Mexico’s GDP growth has fallen in H1 2019, owing to weak investment and lower Travel buyers should note that Rio de export growth, as US imports have slowed. Janeiro is rated “concerning” for traveler Trade tensions and political uncertainty safety in BTN’s Corporate Travel Index have also dented business confidence.7 for the Americas.

Occupancy levels YTD have dropped Santiago 4% slightly from 2018, ostensibly as a result As a commodities exporter, Chile of flat demand and increased supply. At remains particularly susceptible to Sao Paulo 5% the start of 2019, more than fourteen downturns in trade and manufacturing. Now in the third year of a slow recovery thousand hotel rooms, representing Economic growth is forecast to slow in following a deep recession, Brazil’s 3.5% of existing supply, were in 2019 – 2020, as the global economic economy is growing by little more construction in Mexico City. environment cools. Nonetheless, than 1% each year.8 The expected sustained corporate demand and deceleration of the world economy, Monterrey, MX 5% relatively high occupancy will mean as well as limited progress in the local One of the leading business and rates are expected to increase by up to adoption of economic reforms, will limit “Price rises are industrial centers in Mexico, and located 4% in 2020. the economy’s capacity for growth in the forecast across the close to the United States – Mexico coming years. border, Monterrey is particularly With its economic and political stability, region as demand influenced by trade with the US. Santiago is rated the safest Latin Nonetheless, as Brazil’s commercial outpaces growth.” American city in BTN’s Corporate capital and one of the leading business In Q1 2019, Mexico Northwest, the region Travel Index. centers in the Americas, Sao Paulo that includes Monterrey, experienced is performing relatively strongly. the country’s only double-digit decrease Occupancy, while on the low side, is in occupancy, which resulted in the only DOWNLOAD THE FULL improving and ADR has improved 12.5% double-digit drop in RevPAR. CITY FORECAST HERE YTD, versus 7.7% for Brazil as a whole. ‘‘

10 AMERICAN EXPRESS GLOBAL BUSINESS TRAVEL ’’HOTEL MONITOR REPORT 11 KEY CITIES Frankfurt 1% London’s confirmed accommodation Munich 0% pipeline to 2020 covers a diverse range Travel to Frankfurt is driven mainly by Despite sustained year-round demand, of segments, products and brands. banking and professional services. Munich hotel rates are not expected Europe London will see a further 10,000 new Additionally, the city is a major center for to change. At the upper-tier, the arrival rooms open in 2019 and 2020. Some of trade fairs. Together, these factors mean of several premium hotels in 2018 to the largest new hotels are set to open at high occupancy and price levels through 2019 has reduced scope to raise rates. Heathrow Airport. the year. Meanwhile, multiple openings planned for 2020 to 2021 – including the Microstays – where travelers hire a hotel New hotel openings, including IHG, budget brands Motel One, Premier Inn, Amsterdam 1% room from a period as small as three Intercity, Leonardo, Melia, NIU and NH Prizeotel – will push rates down in the The city offers diverse lodging options, hours – have become increasingly popular Hotel rates are predicted and Radisson, account for most of Collection, will ease the upward pressure economy category. with big brand hotels and independent over the last two years. These short to be stable across key the new rooms, with lower end on room rates. Focused on upper-tier properties. New higher tier hotels have hires offer busy travelers a chance to European business categories such as Holiday Inn business, Frankfurt offers only limited Reflecting the modern business opened in recent years, keeping price freshen up or recharge between meetings. centers, against a backdrop of Express and Hampton by Hilton the economy inventory. An exception is traveler’s appetite for informal lodgings, 11 increases low in downtown Amsterdam. moderate economic growth in most popular with hotel developers. the Motel One brand, which opened its corporates are increasingly using young, In the suburbs, however, where 2019, followed by an expected fourth property in the city in June 2019. Madrid 4% on-trend hotels, such as 25hours, as an 9 Responding to traveler demands for corporate offices tend to be located, acceleration through 2020. Increased economic activity is feeding alternative to the standard brands. more informal hotel environments, the rates are rising more rapidly. The big story in Europe is the major brands are re-configuring public One developing trend to watch: through to increased demand and long-stay serviced apartments are rising room rates: the Monitor’s 4% boom in hotel development, areas in their properties. Accor’s Ibis VAT on hotel stays rose to 9% at the becoming increasingly popular among forecast for Madrid is the highest of any which has hit a record high. At chain, for example, has embarked on beginning of 2019. Most hotels passed business travelers. of the key European business centers. the end of 2018, Europe’s total a transformation of its hotel lobbies this increase through to guests. No International investors are taking construction pipeline had to create welcoming, communal further change is expected for 2020. reached 1,569 hotels with spaces for working and relaxing. London 1% note: 2018 investment in Spain’s hotel “The big story in industry broke new records, with Madrid 243,947 rooms, a 19% increase Concerned about over-tourism, In spite of uncertainty related to Brexit, While many business travelers today 12 year over year.10 This major a principal focus for buyers. Europe is the favor sharing economy lodging Amsterdam is limiting the number of London retains its status as a global expansion of room stock is inner-city hotel openings and approved business hub and center for tourism, boom in hotel options, several cities across Europe As a result of concerns about the impact occurring despite lower growth Airbnb properties. Looking ahead, these sport and cultural events. Sustained are staging a fightback against of over-tourism on local communities, development, in the region, and uncertainties moves could lead to higher lodging costs. demand has allowed London to maintain short-term apartment rentals. Madrid’s city government wants about Brexit and the global high occupancy rates. However, ADR has which has hit a Amsterdam, Madrid and Munich are to introduce severe restrictions on economic outlook. risen slowly on account of the steady three locations where GBT’s local Brussels 3% apartment rentals. These proposals record high.” increase in supply: around 20,000 new Germany is leading the experts have identified moves by local As well as being home to key EU would eradicate the majority of rooms joined the city’s inventory in the development boom with 379 government to curb offerings such as institutions, Brussels is one of the apartments currently used as vacation last five years. projects in the pipeline, with the Airbnb. Going forward, as well as world’s top destinations for international rentals in the city. UK closely behind with 281 hotels putting upwards pressure on prices, conferences while also attracting in the works. Branded hotels, this could reduce traveler choice. significant inbound tourism. Sustained including IHG, Hilton, Marriott demand for lodging means hotels in the ‘‘ city are likely to raise room rates by up to 3% in 2020. Room rate forecast: Europe On the supply side, the construction pipeline is relatively quiet: key inventory 0 +1% +2% +3% +4% arriving in the next year includes the 140-room Moxy in the city center and Amsterdam +1% the 305-room nhow. Brussels +3% Dublin 3% ’’ Dublin The hospitality sector in Dublin is +3% experiencing rising occupancy and ADR Frankfurt as Ireland’s relatively strong economic +1% performance, combined with healthy London +1% inbound tourism numbers, continues to drive demand. Madrid +4%

Occupancy levels are expected to remain Munich high due to persistent shortfall of supply. 0% This despite a hotel development boom Paris that will add almost 700 new rooms +3% to the city’s stock by 2020, with an Rome +1% estimated additional 3,000 hotel bound for Dublin by 2023. Stockholm +1%

Source: GBT

12 AMERICAN EXPRESS GLOBAL BUSINESS TRAVEL HOTEL MONITOR REPORT 13 KEY CITIES Europe

Paris 3% Rome 1% Stockholm 1% A major center for business and tourism, One of the more expensive cities in Demand for guestrooms in Stockholm’s Paris attracts visitors throughout the Europe for the visitor, Rome saw rising hotels is outpacing supply, even though year. Rate rises, however, are likely to be ADR in 2018 and Q1 2019. Against a the city added 1,840 rooms last year relatively modest as the city continues background of very low GDP growth, alone, and ADR is rising steadily. Demand to add new capacity at pace. Key arrivals and a slew of hotel openings, room rates is expected to continue to rise as include the re-opening of the Pullman are expected to be stable, growing only economic growth strengthens in 2020.14 Montparnasse and the opening of the marginally in 2020.13 The city is responding to the uptick in Courtyard Paris Porte de Versailles. demand by adding new capacity: 4,900 Scheduled for Q1 2020, these large Among the planned openings are the hotel rooms are planned in Stockholm hotels are strategically located for new Iberostar, the 439-room Hilton County over the next five years, with corporate and exhibition visitors. At the Rome Eur – La Lama and the 297-room 1,236 in downtown Stockholm. upper-tier, Bulgari has announced plans Radisson Blu GHR. for a new luxury hotel in Paris to open Spurred by the city’s hotel growth wave, the same year. international hotel brands are stepping up their activity, with recent major Paris has a growing non-traditional investments by Radisson Hotel Group, lodging offering, attractive to many Zleep Hotel and Scandic. modern business travelers. Two examples of this trend opened in 2019: the 25Hours and Jo&Joe.

0

14 AMERICAN EXPRESS GLOBAL BUSINESS TRAVEL HOTEL MONITOR REPORT 15 KEY CITIES

Lagos -1% Riyadh -8% Tel Aviv 6% Middle East & Africa Demand for accommodation in Lagos As part of a plan to diversify the A tourism boom, allied with the is weak, as many corporations restrict economy away from oil, the Kingdom continuing expansion of the Israeli tech travel to the city on account of traveler of Saudi Arabia wants to increase the industry, is attracting higher volumes safety concerns. Nevertheless, travel to number of visitors to Haji and Umrah to of inbound travel. Room rates are Lagos continues to be essential for many 30 million a year by 2030 – up from 8 increasing as demand continues to companies in the energy sector. million a year in 2016, when the Kingdom outstrip supply. However, the heightened Abu Dhabi -4% Dubai 0% announced its Vision 2030 initiative. threat of terrorism could see rates fall if Inventory tends to be smaller The plans are drawing interest from the any increase in attacks leads to a fall in The nations of the Middle The UAE is experiencing a rapid increase The large increase in the number of independently-owned hotels, major hotel chains, who are starting to visitor numbers. East continue to make in its room stock, which is impacting hotels being built ahead of the 2020 apartments or high-end luxury hotels. increase building in Riyadh. large investments in occupancy and pushing down rates. Expo has softened rates. However, Tel Aviv is seeing a boom in boutique cultural and tourism projects as Falling oil prices have further reduced the Expo is expected to generate high The number of new hotel openings hotels, led by Brown Hotels. they seek to pivot their demand, again putting downward demand, so rates should increase means supply currently exceeds economies away from oil. pressure on rates in Abu Dhabi. from October. A stronger economic demand in Riyadh. Even with GDP Short-term rentals are not currently performance forecast for Dubai through Traditionally, luxury and growth forecast to grow by around 2%, regulated in Israel. While no timetable The 2020 Expo event in neighboring 2019 and 2020 should also prevent rates upper-upscale hotels room rates in 2020 are expected to fall has been announced for its introduction, Dubai will cause demand to pick up. from declining.16 predominated in the region. by up to 8%.17 a proposed tax on Airbnb hosts could Nonetheless, room rates are expected to Increasingly, midscale hotels are reduce supply or push up rates. decline by up to 4 percent. Hotel developments tend to be in the becoming part of the hospitality luxury and upper upscale tiers, though mix, allowing countries and more midscale properties are appearing cities to cater to travelers across Doha -10% as demand strengthens. Emaar a wider range of income groups. Qatar has been under an economic hospitality has developed the Rove According to STR, 125,052 embargo, imposed by Saudi Arabia, brand to tap into this segment. rooms are under construction in Bahrain, Egypt and the UAE, since the Middle East. With more than June 2017. The effect of the political 56,000 hotel rooms under situation on demand, combined with an Johannesburg 4% construction, the United Arab oversupply of upper upscale and luxury With the local economy growing and Emirates (UAE) accounts for rooms, is forecast to drive a significant demand rising, while the construction almost 45% of this number.15 decline in room rates. pipeline is narrow, Johannesburg is seeing rising ADR. In Africa as a whole, around 25,000 hotel rooms are currently The hotel industry is dominated by major under construction. The Hotel chains, though lodge and independent Monitor looks at the specific hotels are also a strong presence. issues driving rates in the key business destinations of Lagos and Johannesburg.

Room rate forecast: Middle East & Africa

-10% -5% 0 +5% +10%

Abu Dhabi -4%

Doha -10%

Dubai 0%

0 Johannesburg +4%

Lagos -1%

Riyadh -8%

Tel Aviv +6%

Source: GBT

16 AMERICAN EXPRESS GLOBAL BUSINESS TRAVEL HOTEL MONITOR REPORT 17 KEY CITIES Room rate forecast: Asia Pacific

0 +1% +2% +3% +4% +5%

Asia Pacific Bangalore % +5

Bangkok +2%

Beijing +1%

Bangalore 5% Bangkok 2% Ho Chi Minh City +2%

Home to some of the As India’s high-tech hub, and home Thailand looks forward to welcoming a Hong Kong +3% world’s most dynamic to major multinational corporates, growing number of visitors, even with an economies, the Bangalore is one of the top business uncertain political situation following Kuala Lumpur +2% hospitality industry is growing destinations in the country. Demand the inconclusive general election in rapidly across Asia Pacific. from business travelers means room Q1 2019. According to government Melbourne +2% Thousands of beds are being rates are expected to rise by up to 5% in estimates, tourist numbers for 2019 will 2020, even as supply grows at double- be up by about 8%, reaching a record added in the region’s key cities Shanghai % 18 19 +2 every year. Even with the added digit rate. 41.1 million. To accommodate the expected growth in demand, Bangkok’s capacity, sustained demand in Singapore +2% these growth economies means The international hotel brands are Suvarnabhoomi airport is currently rates are likely to see some rises. increasingly making their presence being expanded. When complete Sydney +1% felt in the city. Key new additions to in 2020, it will handle 60 million Inbound leisure and business Bangalore’s hospitality offering include passengers per year. Tokyo +4% were the key drivers for hotels in India’s second Four Seasons and a Asia Pacific, but increasingly Radisson Red hotel. Fern Hotels & To stimulate the services sector, the Source: GBT domestic travelers are filling hotel Resorts, an Indian brand built around national government has reduced taxes beds, compensating for any falls environmental sustainability, is also on hotel stays and expanded the number in international visitor numbers. opening a hotel. of construction permits for new hotels. The Greater Bangkok Region is one of The major global hotel brands The Indian Machine Tool Manufacturers’ the key areas for hotel development. continue to build their presence Association will organize its flagship The majority of new inventory is 3-star, Beijing 1% Ho Chi Minh City 2% Hong Kong 3% across the region, developing IMTEX Forming 2020 at the Bangalore 4-star and budget hotels. inventory from budget and China is seeing rapid expansion of the Vietnam has seen significant growth of The opening of a bullet train connection International Exhibition Centre in mid-market to the upper-upscale hotel supply at every tier. Demand for foreign management companies and between Hong Kong and the mainland January 2020. Billed as the largest event Meetings and events (M&E) is a strong and luxury tiers. five-star hotels, driven by domestic international hotel brands in the last few in 2018 contributed to record visitor of its kind in South East Asia, IMTEX is growth area for Bangkok’s hospitality and international business travelers, years. A recent arrival in Ho Chi Minh numbers last year. The volume of expected to bring more than 80,000 industry, as hotels look to drive up In 2020, the region will host the is strong and expected to remain City, the Mandarin Oriental, underlines visitors, combined with a slowing rate of visitors to the city. earnings on room bookings, the hire highest-profile global event there robust. As a result, China is among the how the city is becoming a destination hotel development, resulted in very high of conference facilities, and food and is, with the Summer Olympics in most important countries for global for upper upscale travelers. citywide occupancy rates, which have beverage sales. Tokyo. Japan hopes to attract 20 operators, with brands such as Hilton persisted ever since. The gap between million inbound visitors in this and Hyatt aiming to grow their presence. The chief destination for international supply and demand means rates for gala year for the country. DOWNLOAD THE FULL visitors, Ho Chi Minh City is expected 2020 are forecast to rise by up to 3%. CITY FORECAST HERE Despite the rise in supply, occupancy has to maintain solid occupancy levels not been negatively impacted. In fact, and ADR in 2020 due to a limited Hotel development rates are accelerating, according to STR, occupancy for high- construction pipeline. Looking further with around 20,000 new rooms due to end hotels has grown every year since ahead, relatively high yields in Vietnam be opened in the next five years. 2013.20 This means rates are likely to be are attracting Asian-based property stable, and even rise slightly, in 2020. developers and real estate companies focused on mid-market business hotels Key new developments for Beijing in Ho Chi Minh City and Hanoi. include the launch of a joint venture between Hyatt and Shanghai-based Homeinns Hotel Group to attract younger travelers in the upper- midscale segment. “The hospitality industry is growing rapidly across Asia Pacific. Thousands of beds are being added in the region’s key cities every year.” 18 AMERICAN EXPRESS GLOBAL BUSINESS TRAVEL ‘‘ ’’HOTEL MONITOR REPORT 19 KEY CITIES Asia Pacific

Kuala Lumpur 2% Melbourne 2% Shanghai 2%

After five years of sustained hotel The fourth-fastest growing city in the Growing supply is compensated by development, supply growth in Kuala developed world, growing by 125,000 demand growth, particularly on the Lumpur has outpaced demand, people a year, Melbourne is predicted to domestic side: while trade tensions with preventing significant rises in ADR. be Australia’s biggest city by 2028. the US have affected outbound travel, there has been a much weaker effect on The current construction pipeline of Supply has been growing, particularly in inbound and domestic travel. 25 hotels and 6,900 rooms will put the luxury sector, and is balanced with additional pressure on certain areas of demand, meaning only modest rate rises Shanghai is experiencing major the city, particularly for high-end hotels are expected. investment by global hotel brands. since half of all the new hotels will be in Recent and new openings include JW upper-upscale and luxury hotel classes. Australia is undergoing its largest-ever Marriott, Bellagio, InterContinental hospitality expansion, with the biggest Shanghai Wonderland and the boutique In recent years, global hotel chains growth in “lifestyle” hotel brands. These Edition brand. have arrived in the Kuala Lumpur provide a less corporate experience region, including premium brands such than can be found in traditional as Four Seasons, W Hotels, St Regis business hotels. Aimed at tech-savvy and Sofitel. Mid-range hotels include modern travelers, technology is a core Hilton Garden Inn, Citizen M Bukit component of the offering, with features Bintang, Travelodge Bukit Bintang and like free high-speed Wi-Fi, casting Travelodge Central Market. capability to in-room screens and keyless entry. New lifestyle-oriented arrivals to Singapore 2% Sydney 1% Tokyo 4% Melbourne include Marriott’s Aloft and Key developments, including the An injection of new capacity into Hotel development has been boosted by Moxy brands, along with IHG’s voco. expansion of Changi airport and major Sydney’s room stock in 2019 and 2020 growing inbound tourism and rising ADR. investment at Resorts World Sentosa, will push down occupancy. Room In 2018 the country welcomed a record are expected to increase tourism rates are expected to rise by only 1%, 31.2 million visitors, an 8.7% increase over and M&E business into Singapore. sustained by a full calendar of large the prior year and almost quadruple the Nonetheless, even with steady GDP national and international events coming number of visitors in 2008. More visitors growth forecasted, room rates are to the city. are on the way, with the 2019 Rugby World expected to remain stable, with only a 2% Cup and the 2020 Summer Olympics. rise predicted on account of inflation. 21 Despite being a gateway city, Sydney has relatively limited luxury inventory. Despite a major expansion in hotel In line with a global shift in business This looks set to change, with up to capacity in recent years, which has added traveler preference towards non- 2,000 rooms under construction in and around 30,000 rooms, Tokyo is expected traditional accommodation, Singapore- around the city. New arrivals include the to face a shortfall of around 3,500 guest based lodging owner-operator Citadines 586-room W Hotel Sydney. rooms. With so much demand chasing has unveiled Citadines Connect, a an inadequate supply, rates in 2020 are short-stay version of its serviced Hotels are increasingly being designed predicted to rise by up to 4%.

0 residence brand. to cater to mobile workers, offering co-working and more informal environments. Next Story Group’s DOWNLOAD THE FULL Kafnu exemplifies this approach. The CITY FORECAST HERE brand’s first Australian outpost, Kafnu Alexandria, opened in Sydney in Q1 2019.

“The major global hotel brands continue to build their presence across the region, developing inventory from budget and mid-market to the upper-upscale and luxury tiers.” 20 AMERICAN EXPRESS GLOBAL BUSINESS TRAVEL ‘‘ ’’ HOTEL MONITOR REPORT 21 Using data to optimize your lodging program Methodology

TIPS FOR BUYERS Forecasting requires a lot of good data. We delved into our vast data lake to understand the dynamics at a city level in Data insights, presented in a clear 4. Data can help you understand local-currency terms, using proprietary and compelling way, can give travel the factors that shape traveler sources including anonymized and buyers the means to differentiate their experience. Think about how you aggregated hotel transaction data over program and work more strategically can use data insights to improve the past five years. with stakeholders, both within their traveler experience, thereby driving organization and externally. compliance and reducing leakage. In addition to seeing what was happening in key cities based on our data, we 5. Employee wellness is at the top of Equipped with the right data insights, factored in other variables that impact the the corporate agenda: explore how buyers can achieve a number of important hotel industry as a whole. We augmented you can use data insights to identify benefits for the lodging program. These the data set with other macroeconomic issues among your travelers and include driving savings through more variables from the International Monetary drive effective support solutions. effective supplier negotiations, boosting Fund (IMF) and broader industry metrics traveler compliance, and using insights 6. Engage key stakeholders – including from hotel data specialist STR. to demonstrate the total value of HR, Finance, Sales and Operations the program. – to agree the definitive data Good forecasting requires us not just to and reporting strategy for your project the trend of the data forward. That Here are seven tips to help buyers deploy organization. This will include the key ignores a lot of residual variation, as well data in their organization, taken from deliverables for each stakeholder. as seasonal highs and lows, compromising Putting data to work for your lodging Use all the available data to generate the accuracy of the forecast. The program, a guide for travel buyers clear and relevant dashboards (your approach we use models the residual developed by experts as a companion to TMC should support you) and issue variation using broader industry and the Hotel Monitor 2020. them regularly. macroeconomic variables. We included only those variables with the biggest 1. Make sure you understand the 7. Evaluate critical findings from the impact to avoid overfitting the model. four types of data: descriptive; dashboards and propose solutions diagnostic; predictive; prescriptive – to your key stakeholders. If you Using third-party expert forecasts of and how you use them. can provide answers to problems those external variables, we were able to they don’t know they have, you will 2. It’s important to present data increase the accuracy of our ADR forecast increase your credibility. in a format that is easy for by adding our model of residual variation. your audiences to understand. This is a good time for travel buyers to Think about using graphics and start making more use of data insights. visualizations to make your message Suppliers are making the relevant data more compelling. available. There is a wealth of support 3. Don’t forget to look at what and advice available on how to harness opportunities are available from data-driven insights, from consultants For in-depth expert advice on how you utilizing combined M&E and and TMCs. can use data to optimize your program, accommodation spend with hotel download our white paper here. suppliers, as well as other benefits such as reducing hotel attrition.

“Equipped with the right data insights, buyers can achieve a number of important benefits for the lodging program.” 22 AMERICAN EXPRESS GLOBAL BUSINESS TRAVEL ‘‘ ’’ HOTEL MONITOR REPORT 23 ABOUT AMERICAN EXPRESS References GLOBAL BUSINESS TRAVEL North America American Express Global Business Travel (GBT) is the world’s leading 1. www.bloomberg.com business partner for managed travel. We help companies and their 2. www.theglobeandmail.com employees prosper by making sure travelers are present where and when it matters. We keep global business moving with the powerful backing of Central & Latin America 17,000 travel professionals in more than 140 countries. Companies of all 3. www.hotelnewsnow.com sizes, and in all places, rely on GBT to provide travel management services, 4. www.oecd-ilibrary.org organize meetings and events, and deliver business travel consulting. 5. www.hotelnewsnow.com 6. www.worldbank.org

Learn more at amexglobalbusinesstravel.com 7. www.oecd-ilibrary.org 8. www.bloomberg.com

American Express Global Business Travel (GBT) is a joint venture that is not Europe wholly owned by American Express Company or any of its subsidiaries 9. ec.europa.eu (American Express). “American Express Global Business Travel,” “American 10. www.lodgingeconometrics.com Express,” and the American Express logo are trademarks of American 11. tophotel.news Express and are used under limited license. 12. www.euroweeklynews.com 13. www.bloomberg.com No disclosure or use of any portion of these materials may be made without 14. ec.europa.eu/info the express written consent of GBT. © 2019 GBT Travel Services UK Limited. Middle East & Africa 15. www.constructionweekonline.com 16. www.bloomberg.com 17. www.imf.org

Asia Pacific 18. www.hospitalitybizindia.com 19. www.bloomberg.com 20. www.hotelnewsnow.com 21. www.imf.org

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