As the planet’s publicly listed hotel firms report their half-year 2025 earnings, their CEOs are being careful to offset generally good numbers with talk of demand and operational cost pressures.
Guests are checking into hotels in high numbers, with occupancy mostly going up in year-on-year terms.
Travel is a must-have nowadays, and it appears guests will cut expenses in other parts of their lives to enjoy a vacation, or even two.
Business travel is not back to where it was or hoteliers would like it to be to offset leisure.
So why are there numerous cost-of-living crises, ones that show no sign of disappearing?
Is it because we love to moan?
In the United Kingdom, we tend to be freeze at the first sign of monetary hardship, and, historically, we save and await Americans to restart the global economic spend.
Disposable income — which more than ever is being put in the travel-expenses basket — is directly calculated by offsetting inflation against salary, and inflation remains persistently stubborn.
Wages are increasing, but in real terms, I believe, by little. There is a sense that energy, housing and food are taking up a larger percentage than they used to. If the perception is that they are, then essentially they are.
Yes, inflation is lower than it has been over the last few years. A look at airline prices can be a frightening exercise, and there can be no question that they have increased far ahead of inflation, even if the airlines argue they’re playing catch-up to the pandemic years.
I have not been on a flight that has not been full for a long time, although that could be because of there being fewer planes in the air or destinations being served, and there is plenty of money being spent on hotel stays.
Hotel prices are eye-watering, too, regardless of the operational and labor costs hoteliers must choose either to bear or pass on.
In the U.K., employer increases in National Insurance contributions are onerous, and truly onerous to some.
My colleague Natalie Harms wrote about travelers/guests increasingly booking trips using buy-now-pay-later loans. Hoteliers are last to the game, and there are concern from many that such guests do not spend ancillary revenue. If this is money guests do not have in their bank accounts, then spending it is a slippery slope.
I hope I am wrong and hoteliers always have been nimble enough to seek and capture new demand. But I am not confident that inflation can be tamed sufficiently for housing and energy in the near term, even the mid-term, and I see travel spend deriving from a smaller overall pot.
Sustainability and balance are called for to see growth but not rampant inflation.
Are we looking at a big stone dropped in a still pool of water, its ripples circling from its middle and getting fainter and fainter?
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