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“Hotel prices may still be giving the Bank of England a headache when looking at the annual trend but there’s been a complete about turn in the past month. They were blamed for a lot of the upward pressure on inflation in June but fast forward a month and they’re the reason inflation isn’t significantly higher than it is.
“People talk about surge pricing, or what’s known in the industry as dynamic pricing, fuelling price rises but this month’s data is a lesson in how that isn’t a one-way street and you’ve got to take the market with you. Hotels appeal to both consumer and business travellers but both can be very price sensitive, and it’s significant that this retreat in the trajectory of prices comes at the start of the peak holiday season. The spending power of holidaymakers appears to now be softening.
“Major online travel agents had revealed strong demand this year for international travel but it wouldn’t be a surprise to see some further cooling off in the coming months. Last year’s inflationary peak has been unwinding for a while now after a period in which hotels were desperate to raise prices where they could to offset a post-pandemic upswing in operating and labour costs.”