UBS Corporate Travel Survey Shows Strength Of Buyers In 2004

Travel managers gearing up for 2004 hotel negotiations expect rates to be flat, according to survey results released today by UBS investment bank.

The survey conducted earlier this month of travel managers responsible for approximately $450 million in annual hotel spend identified three other trends: Travel buyers will continue to consolidate group bookings at their preferred hotels to give them greater leverage, 40 percent expect to increase their use of midprice hotels as opposed to full-service brands and buyers also showed a strong preference for working with multi-brand companies where they can gain efficiencies from the "one-stop shop."

In the short term, Keith Mills, UBS senior REIT and lodging analyst, expects business travel volumes to be flat or up slightly from September through December, compared with the same period last year. Similarly, revenue per available room, a key indicator of hotel profitability, should be flat. Taken together, survey findings are likely to put additional pressure on hotels through 2004 as their costs continue to increase despite flat revenues. Mills said business travel is expected to account for 70 percent to 75 percent of 2004 revenues at most lodging properties.