VIENNA — Hotel rates, and the costs of travel in general, are higher. But so are the costs of operating hotels and providing travel experiences.
The theme of this year's Hotel Investment Conference, Central and Eastern Europe, better known as HOTCO, dubbed this "The End of Cheap."
At a panel on the topics of resorts, health and luxury, speakers said as costs go up on everything from financing to staffing a hotel, so do prices that are passed on to guests.
Hotel average daily rates have increased for many months, even with occupancies in some hotel markets around the world only now recovering to 2019 levels. Flight prices also have risen, even for low-cost airlines.
Takuya Aoyama, vice president of development for Central and Eastern Europe at Hyatt Hotels Corp., said it is more expensive for people to go on vacation to the Mediterranean than it was in 2019.
“For the vast majority [of hoteliers], revenue per available room is growing. In Central and Eastern Europe, occupancy is not fully back and a little lower than it is in the Mediterranean, which is not 100% back either,” he said.
Panelists said pricier vacations have resulted in guests looking at other destinations in Europe that not long ago might have been considered unfashionable.
Aoyama said Hyatt is opening 1,400 rooms in a resort on Poland’s Baltic Coast.
Christian Buer, managing partner at business advisory Horwath HTL and the moderator of the panel, said Albania expects a 63% increase in visitors by 2031, compared to 2019.
Meanwhile, the continued strength of the luxury hotel segment is evidence that guests with the means are willing to pay more for higher quality.
Christian Hribar, head of development at hotel ownership firm Arabella Hospitality, said much investment is going into the segment.
“We opened the Rosewood Munich last October, confirmation of the original idea of bringing a unique building into this iconic brand,” he said.
He added ADR for the hotel is approximately €700 ($753) “minimum, but the aim is four-digits, which is achievable as we have 59 suites. Maybe we’ll do this later this year.”
Aoyama said guests are seeking the perfect experiential brand, and luxury hotels that prioritize experiences will continue to have pricing power.
Niche brands also are seeing opportunities to push rates.
Frank Halmos, CEO of Ensana, which is part of Hungary’s Danubius Hotels Group and operates hotels in the wellness and health arena, said “everything is working in our favor.”
“We’re trying to tap into new countries. We are in six now. Saudi Arabia is attractive, as are Italy and Greece. Bulgaria is very interesting. Limiting us is that we need [destinations] with natural resources,” he said.
Chloe Parkins, senior economist at Tourism Economics, said for younger travelers, luxury has changed from the traditional notion of space, room to move, being the most-sought-after attribute.
“It is not about square meters but amenities. It can be a smaller room if that [room] has everything you need. One drawback is that rooms also contain everything you do not need,” she said.
Aoyama said luxury is personalization, and hotel firms at this end are eager to invest in something that is timeless.
“When you walk into a luxury property, you should know it is one,” he said.
Halmos said his hotels work hard to make a brand promise.
“That comes with a cost,” he said, adding that it is possible to create branded hotels that are unique.
He said guests should realize what a hotel’s brand is even if all the hotels in that brand are different.
Hribar said the industry is awaiting the return of travelers from Asia and the capital they will bring with them.
U.S. travelers have fallen back in love with Europe, too, he said.