Corp. Negotiated Hotel Rates To Rise Only Slightly in '09, Says Hanson

Early data shows annual 2009 corporate negotiated hotel rate increases should fall in the 1.5 percent to 2 percent range as the power shifts from seller to buyers, according to a trend analysis report released today by Bjorn Hanson, associate professor at New York University's Tisch Center.

Many corporate travel buyers are opening negotiations this year in anticipation of a 2 percent rise, according to Hanson, while others are negotiating for rate reductions of as much as 2 percent. The preliminary indication is for the overall average increase to be in that 1.5 to 2 percent range, while large group rates increase by about 2 percent, he said.

Buyers also increasingly are discussing amenities in their negotiations, including phone access, fax usage, fitness centers, breakfast and transportation, according to Hanson.

Leverage for buyers rests partially with the overall 5 percent average rate increase they saw in 2008 compared with 2007, Hanson said. As the leisure travel market is affected by the economic downturn, those set rates are buoying hotels in the closing months of the year and will be a key contributor to an overall 3.1 percent increase in rates for 2008, he said.

"This year, most corporate travel managers are including in their negotiation strategies for 2009 a plan to recover what some are calling a subsidy of hotel average rates in 2008 because of what have become high rates negotiated in 2007 for 2008," Hanson said in his report. "Many analysts and some hotel executives have complimented the hotel industry for maintaining rates during this year of declining occupancy, but the corporate, contract and convention/group rates negotiated in 2007 and earlier have been a significant factor supporting average daily rates in 2008."