HRG Measures Depths Of 2009 Corporate Hotel Rate Drops

Houston and Ottawa were the only cities worldwide where hotel rates rose in 2009, according to travel management company HRG. Houston experienced a 7 percent increase in local currency, which HRG attributed to the continuing strength of the oil and gas sector. Ottawa was up 3 percent, although HRG did not venture an explanation for this rare exception to an otherwise consistent picture of rate declines, often by double-digit percentages.

Some of the largest drops were also in North America, with New York and Chicago both down 23 percent to $319 and $205, respectively. However, HRG did observe a recovery in New York in the fourth quarter owing to the revival of the financial services sector. Other cities to experience big falls in local currency were Dublin and Dubai, both down 21 percent, and Zurich and Hong Kong, both down 18 percent.

HRG said its figures are based on a combination of industry intelligence and rates booked by U.K.-based corporate clients. Converted into U.K. pounds sterling, the most expensive city worldwide for the fifth year running was Moscow, at £267, even though rates fell 5 percent in local currency as a result of lower demand from some sectors and the opening of new hotels to reverse several years of decline in room stock.

Second on the list was Abu Dhabi, at £223, up from fifth last year and heading in the opposite direction to neighboring emirate Dubai, which at £182 fell from tenth place to sixteenth. Abu Dhabi was down only 1 percent in local currency. New York was third at £203.

HRG reported that rates started to improve in several major cities in the fourth quarter of 2009, albeit in comparison with fourth-quarter 2008, the first quarter to show a slump in most destinations. "Whilst indications are that rates will remain flat in most markets globally, there are signs of increasing occupancy as the effects of the recession beginning to ease off in certain markets," said HRG director of global hotel relations Margaret Bowler.

"In 2009, the playing field leveled as occupancy levels decreased and corporates gained greater access to negotiated rates," she said. "Hoteliers have tried to maintain rates and therefore corporate travelers have increasingly been able to secure value-added services as part of their negotiated rates, such as Internet access, parking and breakfast."

Another trend observed by HRG is that rate declines were less pronounced in the five-star market than in lower-tier properties. The average five-star rate fell only 3.5 percent. "Top hoteliers proved willing to sacrifice a degree of occupancy in order to maintain rate integrity," said HRG's report.