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No let up in hotel construction, despite pleasures of Airbnb

If Airbnb was supposed to have put the skids under the traditional hotel model then nobody appears to have told developers who are busily pumping millions into new projects.

Development is at a record high in Europe, according to The Hotel Monitor 2020 from American Express Global Business Travel, as hotels take the battle to short-term apartment lets.

Germany is leading the development boom with 379 projects in the pipeline. The UK is close behind with 281 hotels in the works. London will see 10,000 new rooms in the next 18 months.

Asia and the Middle East are also witnessing a construction boom.

And yet from a consumer perspective, Airbnb’s offer can seem to good to be true – good enough, at any rate, to significantly, curb investment in new hotel builds.

I have stayed in apartments for €70 per night whose luxury and locality would have set me back €400 per night in a hotel. And no cleaners in the corridor waking me up at 7am!

With more than six million listings worldwide, with an average rate of $80, Airbnb has grown at a global compound rate of 153% since 2009. So now –  as the world economy shows renewed signs of strain – seems a strange time for an investment splurge in new hotels.

Are these developers mad? Or are they relying on cities, like Amsterdam, Barcelona, Berlin, and Paris, clamping down on Airbnb, who they blame for exacerbating the housing crisis?

Well, for one thing, it looks like hotels are learning from the shared economy experience.

The report points to a tendency of major hotel brands to invest in new lifestyle formats to attract modern business travellers. These properties offer shared working spaces and a less formal environment than might be found in more traditional corporate travel hotels.

Like a craft beer that’s really owned by InBev, or artisan coffee shops owned by Tesco, big brand hotel chains are hi-jacking the small is beautiful philosophy: ‘boutique hotels’ for the masses.

Technology is a major theme: digital innovation is driving change across the hotel landscape, creating new opportunities to increase savings and improve the traveller experience.

But what about the price differential? Demand continues to shore up room rates. However the report predicts that, the construction boom and new international trade tensions, means hotel prices in most key cities will experience only modest rises in 2020.

The picture varies from region to region, and within regions.

In the Middle East, for example, big drops in rates are predicted across the UAE, apart from in Dubai where rates are likely to remain static thanks to its hosting the World Expo. In North America Canada expects rises, where the US expects no much movement.

Joakim Johansson, VP, Global Business Consulting at GBT, said: “Despite signs that the global economy is facing challenges, the number of people travelling for business and leisure continues to grow. But, in most cities, a full hotel development pipeline means this sustained level of demand will not feed into big rate rises.”