Negotiated hotel rates for Egencia clients in North America during
the first half of the year rose sharply and at a much faster rate than did
non-negotiated rates, the company reported.
Egencia's Mid-Year Hotel Review, based on bookings made
during the first six months of 2013 for stays in the second half of the year,
showed that average daily negotiated rates at large hotel chains were up 5.1
percent compared with last year and up 4.5 percent at regional hotel chains.
Negotiated rates at independent hotels were down 5.1 percent, with non-negotiated
rates about flat, according to Egencia.
Average daily negotiated rate increases were highest in
Philadelphia (24.6 percent), Dallas (12.8 percent), Pittsburgh (12.2 percent),
Los Angeles (8.1 percent) and Boston (7.2 percent). Seattle was the only major
U.S. market where negotiated rates declined, down 3.1 percent year over year.
As such, the spread between non-negotiated and negotiated
hotel rates has declined for Egencia clients, according to the report. In
Chicago, for example, the difference between non-negotiated and negotiated
rates has dropped to $29, down $26 from last year; in Boston, it's dropped by
$23 to only $9; in Los Angeles, the spread dropped by $28, making
non-negotiated rates $6 cheaper than negotiated rates.
An increase in chainwide discounts is likely the culprit
behind this trend, according to Egencia.
Such deals "typically add a significant number of
hotels in large cities as preferred for a very small discount," according
to the report. "In large cities, companies that have chainwide discounts
can potentially add more than 100 hotels as preferred, which does not allow for
hotels to compete for travelers' business via price and artificially promotes
hotels with limited savings to the top of travelers' consideration set."
Average negotiated rates for midprice and budget hotels each
increased 4.2 percent—another potential side effect of chainwide discounts,
Egencia reported. Hotels can price rates higher, and the small discount off
that rate as negotiated in the chainwide agreement makes the hotel a preferred option,
placing it at the top of travelers' searches even though the property might not
be price-competitive with other hotels in the tier, according to Egencia.
The distribution of bookings by tier has not changed much
year over year, though a higher percentage of both luxury and budget hotel
bookings are being made with negotiated rates than in the first six months of 2012,
the report indicated.