Negotiated 2005 Hotel Rates Rose By 3.9 Percent

Corporate negotiated hotel rates for 2005 increased by an average of 3.9 percent, according to PricewaterhouseCoopers. "The range of rates was unusually wide, however, compared to the past few years," said Bjorn Hanson, global head of PwC's hospitality and leisure practice, last week. "Depending on their leverage, travel patterns and willingness to give back value-adds, certain travel managers were able to negotiate increases in the 2 percent to 3 percent range. Others ended up with rate increases that were closer to 7 percent to 8 percent."

PwC in September forecasted negotiated rate increases would fall between 3 percent and 5 percent. As the rebound in the lodging industry gained strength through 2004, hotels approached the fall bid season confident they could get significant rate hikes. Buyers who needed a large number of room nights midweek in the high-demand gateway cities faced the greatest challenge. "In markets such as New York, demands for double-digit increases were common," said Yasuo Sonoda, travel manager for Macromedia in San Francisco.

Hanson confirmed that rate increases were likely to be greater in these markets. "It was also hotel chains telling buyers, 'We needed your business for a couple of years and had no choice but to go along with minimal rate increases. Now, it's time for you to understand that the business has changed.' "