PwC Predicts Negotiated Hotel Rates To Rise 1.9 Percent

U.S. negotiated hotel rates for 2004 are expected to rise 1.9 percent over the prior year, according to projections made today by consultants PricewaterhouseCoopers. PwC last week announced that U.S. 2004 hotel pricing including all types of rates would rise 3 percent for the year.

The 1.1 percent differential in average daily rate can be attributed to two factors, said Bjorn Hanson, who heads the firm's hospitality and leisure practice. "The first was timing. Travel buyers finalized their 2004 rates in November and December 2003, before the industry rebound in occupancy and room revenues had gained traction. In hindsight, they were able to lock in quite favorable rates in many cases. Second, buyers tend to have more leverage generally because of the volume projections they make to their preferred hotels," he said.

For 2005, PwC projects that corporate negotiated rates will rise 3.5 percent, reflecting that occupancy and revenues will continuing to improve further through 2004. "The rate negotiating season in November and December this year will be the hardest since 2000," Hanson said. "The lodging industry is starting to believe that things really have turned."