Hotel room rates continue to grow

Gurjit Degun
17 September 2014

The average price of a hotel room continued to grow in the first six months of the year, according to international corporate services firm Hogg Robinson Group (HRG).

The Russian city of Moscow retained the top spot for the 10th consecutive year despite a 5 per cent decline in average room rate (ARR) to £250.98. “However, large exchange rate movements locally against the pound translated to a 16.3 per cent rise in the local ARR,” the Interim Hotel Survey said.

When measured in GBP, eight out of 50 cities saw an increase in ARR, however movements in the exchange rate against the pound meant that 31 of the top 50 cities saw an increase in local ARR.

Margaret Bowler, director of global hotel relations, said the survey “highlights once again that megacities are continuing to lead the way”.

She added: “Demand is still growing and is yet to peak and with occupancy at record levels in the top business destinations, hotels are feeling confident in the strength of the market.”

Between January and June, Sao Paulo and Rio De Janeiro, Brazil, saw the biggest rate increase, as a result of the World Cup. Local ARR grew 29 per cent and 17 per cent, respectively.

“Johannesburg, South Africa, continues to be effected by over supply and saw a decrease in GBP ARR, but due to a large movement in exchange rate against the pound this translated into a 17 per cent increase in local ARR,” the report added.

“Aberdeen, Scotland, continued to see the booming offshore sector coupled with a lack of new openings drive ARR up by 13 per cent, however with several new openings over the next 24 months we may start to see the growth lessen.”

At the bottom of the table, Chennai in India saw a decline of 14 per cent and 11 per cent, respectively, in local ARR. The study said that the fall is down to two major new hotels opening in Chennai and “softening domestic demand”.

Bowler added: “By consolidating their programme and by building meaningful, long-term working relationships with hotel groups, clients will be better placed to navigate the sometimes volatile market place.

“Furthermore, data and understanding how to use it, is becoming increasingly important in the corporate travel industry. Bigger volume doesn’t necessarily mean better price, which is driven by other factors such as the day of stay. By being smarter with their data clients will be more effective in understanding the total cost of stay at a hotel, such as their incremental spend and the night of a week they are staying, improving their position to deliver the best results from their hotel programme.”

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