Hotel prices in 2010 for United Kingdom-based companies rose fastest in the Asia/Pacific region, according to newly released data from HRG. Last week, HRG group commercial director Stewart Harvey confirmed that the travel management company is experiencing a surge in bookings to Asia, indicating that clients face the highest price increases in the cities to which their travel volume is accelerating fastest.
Destinations with the highest 2010 average daily room rate increases for HRG's corporate clients included Sydney (21 percent year over year, in sterling), Seoul (15 percent), Singapore (14 percent), Kuala Lumpur (13 percent) and Hong Kong (up 12 percent). These increases can be attributed in part to declining value of sterling against local currencies. For example, Sydney's average daily hotel rate rose 2 percent in local currency, while Seoul was up 3 percent. In Hong Kong, however, the average daily rate climbed 11 percent in local currency.
On average, rates paid by HRG's U.K. clients for Western European destinations fell during 2010, as was the case for Moscow (down 12 percent in local currency and 3 percent in sterling). This did not prevent the Russian capital from retaining its position as the most expensive city worldwide, with an average daily hotel rate of £259. The next most expensive were New York City (£212, up from third place in 2009) and Geneva (£203, up from seventh).
While Asia/Pacific and Africa showed the steepest regional increases in hotel pricing, perhaps the two biggest growth markets of all--China and India--last year generally exhibited limited or negative rate growth. HRG director of global hotel relations Margaret Bowler attributed the trend to a significant increase in supply, especially by Western hotel chains. "If you get 10 new openings in one city in China, it will make a difference to the rate," she said. "The Western hotel companies are also starting to take in their non-five-star brands, and that means more choice."
Bowler added that travel buyers generally can negotiate with hotels in developing nations in a similar way to what they would do in any other country. However, in some parts of the world, such as Africa, hotels often are smaller and do not distribute directly through global distribution systems. Greater vigilance over rate loading and auditing therefore is recommended.
Bowler predicted that increasingly strong demand in China and India during the medium term likely would pressure rates upward, despite new hotel supply. That demand strength contrasts with the Gulf states, where over-building has driven down rates sharply. According to HRG, Abu Dhabi in 2010 saw its average daily rate plummet 25 percent, dragging down the city's ranking to 19th worldwide from second a year earlier. Doha was down 10 percent and Dubai was down 5 percent.
Within Europe, some of the largest rate reductions were in cities which experienced severe debt crises, including Dublin (down 11 percent) and Athens (down 9 percent).
North America presented a mixed bag for buyers. In local currency, the steepest climbers were Washington, Los Angeles and Montreal, each up 7 percent, whereas Houston was down 4 percent and San Francisco down 5 percent. Although New York's average daily hotel rate increased 2 percent in 2010, this figure masked a large decline in the first quarter followed by significant jumps in the second and third quarters. Bowler said that favorable corporate rates negotiated at the end of 2009 also helped keep New York prices in check, but accordingly she expects 2011 figures to show a much steeper increase. However, Bowler qualified that statement by saying: "New York has got a lot stronger but there have been some new hotel openings, and that will continue this year."
The article originally was published in Business Travel News