BERLIN — Throughout Europe, government officials say they are doing all they can to reduce inflation and lower interest rates. But hotels are likely to feel the brunt of cost pressures for several more quarters.
In a video interview with Hotel News Now at the International Hotel Investment Forum, Chloe Parkins, senior economist at Tourism Economics, said the rate of inflation on several key components of a hotel’s daily operations — notably on food costs and staff wages — outpaces the rate of general inflation, she said.
The question is how high do prices need to go before hotel industry consumers feel the pinch?
“Prices are still higher than they were, significantly, before the pandemic, but consumers are still prioritizing travel, and with the prices last year that did not significantly affect the market,” Parkins said, adding she did not expect much difference in consumer attitudes throughout 2024.
Inflation is slowing, and that is giving wages a chance to catch up, which could increase the level people are willing to spend on travel, hotels and experiences.
The rise in travel spend from such markets as China and India would see certain European destinations regain market share, Parkins said. One example is Germany, which has struggled economically in the years since the pandemic.
“When Chinese travelers decide they want to venture outside of Southeast Asia, which has kind of been their comfort zone recently, I think economies such as Germany and a few others in Europe are going to see a notable increase,” she said.
Parkins added she thought globally, “the major challenge is interest rates.”
For more of Parkins’ comments, including those of likely benefits to France from hosting the 2024 Olympic Games, please watch the video linked above.