Monday, September 15, 2008

HRG Hotel Survey Shows U.S. Rates Leveling, Elsewhere Strong

Hotel rates for corporate travelers leveled off in North America for the first half of 2008, while other regions—particularly Eastern Europe and Asia/Pacific—continued to show strong rate hikes, according to six-month hotel surveys recently released by HRG.

The surveys, based on industry intelligence and actual room nights booked and rates paid by HRG clients in the United Kingdom during the first half of the year, showed double-digit percentage increases in a number of U.S. markets, including Atlanta, Boston and Dallas. Overall, however, North America has been the first region to see rates begin to level off, and HRG said to expect larger decreases in the second half of 2008, as hotels increasingly begin to open up corporate rate availability.

While New York remained the most expensive North American city, with an average rate of $358.98 per night, it remained stable compared with the same period in 2007. Rates also were flat in Los Angeles and even went down in Houston and San Francisco, according to the reports.

In Canada, rates were up by 12 percent in Vancouver and by 23 percent in Calgary, which HRG attributed to lack of supply in the face of high demand from the oil sector.

New York's stability also reflected a shake-up in terms of the most expensive cities worldwide, HRG reported. While it remained in the top 10 overall, it dropped to eighth place, compared with second place in 2007, and it was the only North American city to appear on the list.

"We are increasingly seeing rates level off in certain markets as they adjust pricing structures to meet market expectations," according to Margaret Bowler, HRG's director of global hotel relations. "This has been noted in London, where rate growth slowed significantly in the second quarter, and in New York, where growth dropped from 6 percent to zero. In this instance, we expect to see a shift in pricing strategies as hotels streamline corporate packages and increasingly strip out extras with less hotels upselling executive rooms, corporate packages or in-room bar pricing deals to make rates appear more attractive."

Regionally, Eastern Europe, with rates up by 22 percent, and Asia/Pacific, with rates up 20 percent, saw the largest year-over-year growth. HRG saw the rates largely stemming from lack of supply and developer focus on the luxury market.

Moscow remained the most expensive city globally, according to HRG. Average rates increased by 25 percent from 2007. Mumbai was second, with rates up 37 percent from 2007. It also was the second-highest increase of any city, topped only by Berlin, which saw rates soar by 39 percent in the first half of 2008.

Most cities, however, saw much higher growth in the first than the second quarter. One exception was Johannesburg., South Africa, which saw rates increase by 26 percent in the first quarter and by 23 percent in the second. "There's huge growth there," Bowler said. "It's lack of supply. Rates have doubled in the last couple of years."

Source: Business Travel News Online.

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