Hotel prices to be more competitive in 2013

20 December 2012

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21 December 2012 | Anna Reynolds

The number of hotel rooms sold is set to fall next year to the lowest since 2005, due to large spare capacity, according to a report by Booking Services International (BSI).

In the organisation’s latest Corporate Benchmark Report covering January 2011 to August 2012, PwC forecast London would see a 3 per cent fall in hotel rooms bought during 2013, the lowest since 2005. This is due to an estimated additional 6,600 hotel rooms introduced for the Olympics and a 13 per cent increase in the number of budget rooms over the past three years.

Sam Welch, BSI’s head of hotel product, said in a statement: “Slow economic growth, in conjunction with a growing appetite for cost reduction and an increase in supply within the UK and internationally, should result in an even more competitive pricing environment in core locations in 2013."

The report said that in the UK, room rates across the top 10 cities are up 16 per cent overall, with London continuing to be the top location booked. It also found the professional services sector pays the lowest average room rates at £75 per night, with the highest rate, £100 per night, paid in the media sector.

Globally, Asia, Latin America and the Middle East saw the most growth in the hotel market, with India also seeing increased supply in key hubs. Occupancy increased by 7 per cent in 2012 in the Middle East and the report also identified demand for hotels in Israel and Saudi Arabia is currently outstripping capacity.

Average room rates in the Americas showed the biggest increase worldwide, up 6.6 per cent year on year, with daily rates up by 5.2 per cent in Asia Pacific. Hotel rate reductions range from 2 per cent in Paris and Munich to 11 per cent in Amsterdam where hotels are offering year-on-year discounts for customers doing business in these locations.

The report recommended buyers understand what travellers really value such as whether they take breakfast or use hotel facilities, and make sure their agency is benchmarking their rates against the industry to ensure the best deal. Further, travel buyers should engage with other relevant business departments to understand future demands and budget constraints and negotiate the total cost of stay, including car parking and wi-fi.

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