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Tiberio Palace on Capri
Tiberio Palace on Capri

Jennifer Lopez recently paid €7000 a night for a suite at the Tiberio Palace on Capri. Of course, there are few who can afford this. A 'regular' room in this hotel costs € 1345 per night this year, but watch out because next year the same room will cost a whopping € 1698. By the way, luxury hotels, those with five stars and higher, suffered the least during the pandemic. The hotel rates of these hotels seem to be going up. Why is that?

Anyone who has gone on vacation to Italy, France or Spain this year may have noticed that it was a bit more expensive than before. Especially hotel rates have shot up considerably. Those who didn't notice this year may have booked through a travel agent who was able to set prices a year in advance. Prices in a travel brochure are inflation-proof, a good reason to book through a travel agent, but not everyone does that. 70% of hotel bookers will book directly, for example through Booking.com or directly with the hotel.

Il Salvatino in Tuscany - have a champagne bath in your room

hotel rates increase + 38.5% before and after pandemic

Florence is the queen of Italy when it comes to increases in accommodation costs. This is according to a study by the Italian National Consumers' Association, which has compiled a complete list of the cities with the highest increases in accommodation and catering, incorporating the latest Istat (Italy's CBS) data for July. The cost increase of hotel rates, motels, guest houses, bed and breakfasts, agriturismi, vacation villages, campsites and youth hostels, overall, is +38.5 percent compared to July 2021. Despite the noises of war and economic crisis, tourism is on the rise in 2022. As evidenced by overcrowded trains and planes. By the end of the year, it could even surpass 2019 overall, before the pandemic.

Tuscany highest hotel prices in all of Italy

If you think the price Jennifer Lopez and Ben Affleck spend on their honeymoon suite is insane, then you're probably also shocked by the prices that a 5-star resort in Tuscany charges in 2022. The newspaper La Nazione recently did a survey of hotel rates in Tuscany. Their findings were very interesting to read. Now I must say that they were looking for a room for August 15th, a holiday called Ferragosto here, then it is normally already a difficult date to find a free room at a late hour.

The lobby of the Grand Hotel Continental in Siena

"There are 74 five-star hotels in Tuscany, according to data from the region. We did a tour on Booking.com and on the sites of the hotels to get an idea of how much tourists spend for a night, especially those between August 14 and 15. Here's what we found out. "There are 22 luxury hotels in the Florence area, with a total of 1318 rooms and 3479 beds. These include the Four Seasons and the St Regis. At the Four Seasons, you can ask for a variety of extra services, including a personal butler or a hot air balloon flight over the city. For two people, rates range from €1430 per night for a 43-square-meter deluxe room to €25.000 per night for the 234-square-meter Royal Suite Della Gherardesca. At the St Regis on Piazza Ognissanti, for a couple, it ranges from €900 (excluding breakfast, which costs €45), to €2 ,430 for a night overlooking the Arno (breakfast and dinner included). Amenities include a digital jukebox, a multimedia system with movies, sports and entertainment, and an iPod docking station. Near Florence at Villa La Massa, a room costs €988 . In Versilia, especially in Forte dei Marmi, there are 6 luxury hotels with a total of just over 500 beds. The Byron is full for the night we chose. When booking, the first available date is September 4. If we were to move our stay to that date, the cost would range between €2 ,000 and €2660, depending on the room chosen.

Included in hotel rates: the winecellar for members in Castiglione del Bosco

In the VIP area of the Argentario Peninsula, there are three super-deluxe hotels. One is the Pellicano, in Porto Ercole. Perched atop a cliff, it has a private rocky beach, a pool with heated water, a tennis court with personal trainer and a Michelin-starred restaurant. For the night of August 14-15, the cost is €4095 for a double room with sea view and €4485 for the large suite of nearly 130 m2.

In Siena, they chose the luxurious Grand Hotel Continental, where a night between August 14 and 15 ranged from € 1621 to € 4410. The Rosewood Castiglion del Bosco which was awarded by the American magazine Travel + Leisure as the best hotel in the world in the Val d'Orcia, it has an organic vegetable garden, cooking school, children's club, golf club and a wine cellar where the wines of the estate are stored. For the night of August 15, a couple spends about 2500 for the Garden suite and up to € 16478 for a Villa along the estate's private golf course. Finally, it rises to € 21516 for a night in Villa Oddi, equipped with a swimming pool, cinema room, outdoor jacuzzi tennis court."

A luxury suite in the St Regis in Florence

Investments in tourism infrastructure for the 'new tourist'

The investments should meet the demand of the so-called 'new traveler': people who book directly, book out of season, long stays and remote workers.

Global real estate investment has more than doubled in 12 months compared to 2020 to almost €70 billion, with interest unevenly distributed by relative location, urban areas, resort areas and level of amenities. In Europe, the hotel real estate market closed 2021 with sales of €21.2 billion and in 2022 this is expected to rise to €26.6 billion.

Italy believes that infrastructure has a very important impact on their competitive position with other tourist destinations such as France. The investments are designed to make you choose to stay longer and not only in the big cities, but especially in the countryside. Italy is going to allocate about 3 billion euros for this purpose in 2022 (real estate sector and hotel sector), the year before it was a third less. The investments must meet the demand of the so-called "new traveler": people who travel a lot, book out of season, long stays and remote workers.

Why does it seem that only luxury hotels are being added?

This is Engel's law in action - (Engel E., 1857). The luxury good is 'elastic' in economic terms. If income increases by 1%, consumption of luxury goods and therefore hotel rooms in this segment increases proportionally, i.e. 1% or more. Engel noted that the poorer a family is, the greater the share of income goes to purchasing basic necessities, but growth in income does not always lead to a corresponding growth in food spending, however. The higher earner will change their consumption pattern and tend to purchase more expensive items such as a new sports car or a luxury hotel room for their vacation.

Il Salvatino in Tuscany - high hotel rates for bathing in champagne not an exception

To give you an idea about the disposable income of a European, you only have to look at the above graph from the CBS. The largest disposable incomes are of people who live off profits and these have actually only increased over the years and the gap between relatively poor and rich is therefore still growing quite a bit. That's why more luxury hotels are needed, because these kinds of people travel more, stay longer and have more money to spend on luxury items, such as a private butler or a champagne bath, for example.

"At the Il Salviatino hotel in Florence, Italy, guests can request the ultimate bubble bath: A private bath filled to the brim with Prosecco, Spumante, or French Champagne, with an additional bottle chilled for drinking. The service starts at €9,000, but of course prices vary depending on the choice of bubbles." Hotel Il Salvatino.

Trade fair and conference tourism still lagging behind

You cannot separate energy prices from gas prices, as in other parts of the world e.g. the United States of America. In Europe, the gas price determines the price of both electricity and fuel and everything that depends on it.

New conference center opened before the pandemic in Rome

An increase in overnight stays and record occupancy hotel rates in 2022 does not mean it will be easy for everyone to survive. The shortage of labor, rising inflation, energy costs and a slow reboot of exhibition and conference tourism will make everything more expensive and cut considerably deeper into the wounds. High energy bills will put about 120 thousand tertiary sector companies and 370 thousand jobs at risk in Italy between now and the first six months of 2023. This is according to the estimates of the Confcommercio-Imprese per l'Italia (The Chamber of Commerce of Italy). In particular, the reason is the continued growth of energy costs and an inflation rate of almost 8%, almost 80% of which is due precisely to the rapidly rising prices of energy commodities.

More demand for vacation homes due to hotel rates

On average, Italians who decide to go on vacation, if they stay in Italy, face a cost increase of about 20%. From ferries to flights, accommodation bookings and other tourism-related services, each element becomes a black hole that sucks up more and more money. All this is then justified by the rising price of fuel, at least as far as transportation is concerned. In order to save money, a large proportion of Italians from the larger cities have chosen to rent an apartment in the summer while other years they usually take a hotel, this will certainly still be true next year. It could mean a lot of pressure on the foreign tourists who have to book even earlier than usual.