PwC: Hotel Availability To Continue To Tighten

At a time when many buyers already are having trouble finding the hotel room coverage in key cities midweek, the availability outlook is expected to tighten further through the remainder of 2005 and into 2006, according to a forecast released today by PricewaterhouseCoopers. Speaking at Corporate Travel World in New York, Bjorn Hanson, head of PwC's hospitality and leisure practice, attributed the situation to increasing occupancy rates, which have allowed hotels to raise daily rates significantly.

“With occupancy increasing at U.S. hotels, availability will be even more limited,” he said, noting that in 2005 hotels anticipate their largest rate increases in four years. These rates will reflect the increases they will seek this fall from buyers in negotiations for 2006 rates.

“Hotels believe the balance of power for negotiations has reversed from what it was in 2001 to 2003,” Hanson said. Meanwhile, hotels continue to seek additional revenue from hotel services, fees which buyers were able to eliminate through negotiations during the past few years. “Costs for hotel services will rise at an even faster pace than room rates,” Hanson said. As examples, he cited increased early arrival and departure charges, higher cancellation fees and automatic gratuities for housekeepers and bellmen.

PwC forecasted that average daily rate in 2005 would jump 4.3 percent, following a 3.9 percent increase in 2004. It expects rates to rise another 4.6 percent in 2006.