Average per-diem rates in the Americas,
excluding the United States, increased by 0.3 percent compared with the prior
year, according to BTN's 2014
Corporate Travel Index. The modest increase was fueled by a handful of Latin
American cities, most notably the Venezuelan capital of Caracas, which in the
past year experienced a 28 percent year-over-year per-diem price hike.
[Please click here to view the digital edition of the 2014 Corporate Travel Index,
featuring all per diem listings, downloadable as a pdf.]
Puerto Rico's San Juan experienced the
next-highest rise in overall per diems (6.6 percent year over year), followed
by Guatemala City (3.1 percent), Quito (2.8 percent) and Buenos Aires (2.2
percent).
"Overall, those markets are experiencing
big fluctuations in their currencies," said Vito Curalli, Hilton's
executive director of sales for Canada, Latin America and international.
"Some of that has to do with foreign-exchange rates around those
currencies in general, with Venezuela, Argentina and Ecuador showing strong
currency movements."
Caracas in February 2013 devalued its currency,
the bolivar. As a result, the 4.30 bolivares that a single U.S. dollar could
buy in November 2012 (when last year’s Corporate Travel Index exchange rates
were calculated) increased to 6.30 bolivares in October 2013, the date of the
current CTI exchange rate.
Meanwhile, negotiated hotel rates for 2014 in
Caracas increased by nearly 30 percent year over year, according to CWT's
director of hotel solutions Yon Abad. The figure potentially could decline,
Abad explained, if Venezuela manages to control inflation. "That's a crazy
figure, " Abad said. "The question is, how long will it last?"
Hotel rates in Venezuela in 2014 could increase
nearly 16 percent due to further inflation, according to CWT's 2014 annual
price forecast.
Meanwhile, one U.S. dollar in November 2012
would purchase 4.80 Argentinian pesos, but 5.80 in October 2013.
"In these countries [the change] can be in
favor of U.S. travelers, but it really depends," Abad said. "In a
situation like Venezuela, it's out of control and does have an impact because
bookings done from foreign countries are often negotiated in foreign currency,
so any big currency change has an impact."
The remaining nine Latin American cities
featured in the Corporate Travel Index in the past year experienced declines
between 1.1 percent and 6 percent. Abad said he has seen similar trends in
hotel negotiations. The index showed per-diem rates in São Paulo and Rio de
Janeiro decreased by 6 percent and 2.8 percent, respectively.
"With the World Cup coming to Brazil in
June, we expect high increases in hotel rates during this period," Abad
explained. "The per-diem rate needs to be mitigated by the fact that in
June you will probably have to pay higher than that."
While 2013 room rates in Rio "remained
almost flat," according to HRG's latest hotel survey, the travel
management company considered this a "positive" trend as it follows
"an extremely good 2012, triggered by the United Nations Earth
Summit."
Argentina experienced a 1.5 percent decline in
negotiated hotel rates, which Abad attributed to the rapid devaluation of
Argentina's peso. However, HRG data show local rates rose nearly 19 percent.
"The decision to promote Buenos Aires as a destination seems to be paying
off," HRG stated in its report.
Per diems in San Salvador declined by 1.1
percent according to CTI, but Abad said negotiated hotel rates in the city
increased by 20 percent last year. Abad also saw a 10 percent increase in
negotiated hotel rates in Bolivia.
However, Panama experienced a "strong
year" for new hotel openings, which may have contributed to a 3 percent
decrease in negotiated rates, according to Abad.
The economies of Chile, Mexico and Peru are
stabilizing and slowly causing foreign-exchange rates to stabilize, according
to Curalli. A new government in Mexico following 2012 elections and the
"tightening" of fiscal policy also are contributing to a more stable
economy, he added.
"The Mexican peso hasn't moved that
much—13 pesos [is equal to] US$1, where last year it was 12 pesos," said
Curalli. "Mexico is starting to see strong growth in its economy because a
lot of manufacturing is moving away from Asia/Pacific to Latin
America—especially to Mexico."
New Hotels
In preparation for the 2014 FIFA World Cup in
June, new hotels will continue opening in São Paulo, according to HRG's latest
hotel survey. "Now it's a question of demand catching up with supply to
restore [average room rates], which will undoubtedly surge this year," the
report noted.
At the end of March, Hilton announced plans to
open a "large" hotel in Santa Fe, one of Mexico City's business
districts. The hotel chain plans to open in the next 12 to 18 months hotels in
Rio and Panama.
Hyatt plans to open during the next three years
as many as 30 hotels, including a Hyatt Place hotel in Santiago, Chile, in
March; its first Hyatt Place hotel in Panama City; a Hyatt Place in La Paz,
Mexico; three properties in Colombia (the Grand Hyatt Bogota, the Hyatt Regency
Cartagena and a Hyatt Regency in Santiago de Cali); and a Hyatt in Montevideo,
Uruguay, according to Hyatt regional vice president of sales and marketing
Alvaro Valeriani.
Hyatt also signed a management agreement with a
joint-venture partner to open six Hyatt Place hotels in Brazil, including one
in Rio de Janeiro to open in late 2015, according to Valeriani.
In 2013 in Latin America and the Caribbean,
Marriott opened nearly 1,000 rooms and committed to develop another nearly
3,000 rooms, representing a total of nearly 50 projects, according to the hotel
company's fourth-quarter earnings call in February.
Starwood in 2014 expects to open four hotels in
Latin America, including an Aloft property in Guadalajara and Four Points by
Sheraton properties in Bogotá, Barranquilla and Cancun.
Canada
While overall per-diem pricing declined in the
five Canadian cities featured in CTI, CWT's Abad said he's seen the opposite
there. The Corporate Travel Index, however, did show that Calgary's average
daily hotel rates in 2013 increased by 0.5 percent, while costs in the other
four cities declined by as much as 4.7 percent.
Negotiated hotel rates in Calgary rose by 4
percent, while Toronto experienced a 2 percent rise in line with inflation,
according to Abad. "I wouldn’t bet on decreases in Canada," he said.
"Any company traveling to Calgary will comment on the same issues of
availability: very few hotels. There's lots of demand from oil companies."
Hilton in the coming years plans to open five
hotels in Calgary and one in Nova Scotia this summer, marking the chain's 100th
hotel in Canada. Starwood in February opened a Four Points by Sheraton in
Waterloo, Ontario and expects to open one in June in Surrey, B.C. Starwood also
plans to open in April an Aloft hotel in Calgary.
This report originally appeared in the March 17, 2014, issue of Business
Travel News.