Rising household expenses and interest rates are causing many consumers to cut back on travel spend. This shift underscores a market in transition, with traditional travel behaviors being redefined and fresh trends surfacing.
Asia embodies this market volatility, with significant optimism projected for H2 2024. Hotel rates have risen 15% compared to H2 2023, a marked improvement over H1’s slight price decline.
However, our data shows that Asian markets, particularly Japan and Southeast Asia, are overrepresented among the poorest performing destinations in 2024, mainly due to a slower-than-anticipated recovery in Chinese outbound travel.
Our data indicates that travelers, particularly from major Western economies, are becoming increasingly budget-conscious. They prefer value-oriented destinations in key global tourism hubs and are opting for slightly shorter stays compared to 2023.
While the global enthusiasm for travel remains robust, there’s a noticeable slowdown in the post-pandemic momentum.
Regional rundown
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Europe, once the pricing growth leader, saw a mere 3% year-over year (YoY) increase in H1, with H2 advertised prices down by 2% compared to H2 2023 actualized prices
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The North American market also looks to be cooling. Relative to H1 2023, prices marginally fell by -0.3% in H1 2024, which after the effects of inflation, equates to a roughly 2% decrease. H2 2024 shows nominal 2% YoY increase in advertised prices, but effectively flat in real terms
LATAM and APAC: Breaking the mold
While many regions face challenges, Latin America (LATAM) and Asia Pacific (APAC) are charting a different course.
LATAM: A rising star
Building on a solid 2023, LATAM leads all regions in pricing performance for 2024.
Average hotel rates in H1 2024 have soared to $269/night (from $233/night in H1 2023), the highest across all regions. This represents a 25% rate increase compared to H1 2022 and a 35% jump during peak period (February and early March).
Advertised LATAM room rates have increased by 19% year-over-year in the second half of 2024, compared to actual rates in the second half of 2023, as real consumer spending is forecast to grow across all major regional economies.
APAC: A tale of cautious optimism
The last three years were marked by consumer hesitancy leading to poor pricing performance in key economies, including China, Japan and Thailand. Hotels in APAC are optimistic for H2 though, pushing room rates up 15% YoY.
While flights and visas still remain problematic for Chinese travelers, our data also suggests that performance varied in APAC, with the region disproportionately represented among the poorer performing destinations – which is discussed in more detail below.
Top performing hotel markets in H2 2024
Summer sun reigned supreme in 2024. The pendulum swung back to classic sun and sand destinations in 2024, contrasting with the cultural city trend of H2 2023.
Hotspots for exceptional room rate growth:
Outside these, Indian destinations are continuing a strong 2023 into 2024, with six destinations listed in the top 20 for price growth in H1 (actualized) and H2 (advertised) 2024.
Spotlight on Saudi Arabia
Riyadh was the 2nd fastest growing destination for hotel room rates in H1 2024. A 31% YoY increase in the first half of 2024 stands out in an otherwise subdued Middle Eastern market.
Riyadh’s success in the tourism market mostly stems from investment in high-profile sporting events (particularly combat sports) and substantial marketing efforts from the Saudi Arabian tourist board.
Bottom performing hotel markets in H2 2024
Asian markets prominently feature among the lowest performing destinations in 2024, accounting for 12 of the destinations with the most significant actualized YoY pricing declines in H1 2024, and eight of the destinations with the weakest YoY advertised price growth in H2.
Underperforming destinations in 2024 are primarily found in Japan, South Korea, and Southeast Asia, regions historically dependent on the growth of Chinese tourism.
Root causes of Asia’s performance
The primary factor behind Asia’s recent performance is the sluggish resurgence of Chinese outbound tourism, post-pandemic.
Traditionally this has been a significant regional driver and countries such as Thailand and Japan, rely heavily on inbound Chinese travelers to support their tourism economies.
The Japan paradox
Despite its popularity with international tourists, its price performance has been surprisingly poor. In the first five months of 2024, international arrivals in Japan surpassed 2019 levels, while room supply has only increased marginally since 2019.
Likely explanations for the current market situation include a noticeable slowdown in room rate growth after the high growth rates experienced in 2023, and the underperformance of second-tier destinations (i.e. not Tokyo and Kyoto) compared to our expectations.
Southeast Asia and Korea
Following a similar trend to Japan, actualized room rates in major tourist destinations like Bangkok, Hanoi, and Seoul also saw YoY growth in the first half of 2024. Meanwhile, smaller, less connected cities are underperforming.
There is potential for a turnaround when tourists start to expand their trips and explore beyond major destinations. Full recovery to 2019 levels is largely dependent on Chinese travelers booking more outbound holidays and expanding travel patterns, accessing second-tier locations.
The hospitality horizon: The trends shaping H2 2024 and H1 2025Western consumers seek value
Travelers from affluent Western nations are grappling with the impact of depleted savings and the sting of inflation, which has subsequently constrained the capacity of hotels to elevate their prices as travelers seek more value for their money.
While this trend could potentially persist into 2025, an upward trajectory in real wages across the Eurozone, North America, and the UK may instigate a reversal once consumer confidence regains stability.
An Asian turnaround gathers momentum
Asian travel markets, which have been significantly impacted since 2020, are now demonstrating encouraging signs of recovery. Q3 and Q4 of 2024 holds promise for popular destinations with robust connectivity.
Enhanced visa processing and increased flight availability from mainland China, coupled with a surge in demand for travel to Japan, are expected to invigorate the market in the second half of 2024. Moreover, the first half of 2025 is projected to witness a broader price growth surge across the region.
Middle classes in emerging markets continue to grow
Rapidly rising rates in LATAM and India underline a growing consumer base that can afford to travel. These markets appear poised for strong pricing growth in H2 2024.
Sun, surf and sand dominate 2024
From the Mediterranean to the Yucatan Peninsula, coastal destinations show strong price growth, consumers look to be heading to resort and beach destinations that offer value.
For more detailed pricing trends, you can refer to our latest report on the state of hotel pricing which looks into hotel and short-term rental rate patterns across the globe, providing invaluable data and analysis for hospitality industry professionals as we move through 2024 and into 2025.
About Lighthouse
Lighthouse (formerly OTA Insight) is the leading commercial platform for the travel & hospitality industry. We transform complexity into confidence by providing actionable market insights, business intelligence, and pricing tools that maximize revenue growth. We continually innovate to deliver the best platform for hospitality professionals to price more effectively, measure performance more efficiently, and understand the market in new ways.
Trusted by over 65,000 hotels in 185 countries, Lighthouse is the only solution that provides real-time hotel and short-term rental data in a single platform. We strive to deliver the best possible experience with unmatched customer service. We consider our clients as true partners—their success is our success.
