The story appears on

Page B5

September 26, 2014

GET this page in PDF

Free for subscribers

View shopping cart

Related News

Home » Feature » Mice

Megacities propel rise in hotel room rates

Hotel room rates, particularly in megacities, continued to rise in the first six months of 2014, according to a hotel survey by Hogg Robinson Group, an international corporate services company.

Despite key factors such as the strengthening of the pound, 31 of the top 50 cities registered an increase in the local average room rate (ARR) during the first half of this year, the survey found. Occupancy in key business destinations remained at record levels and continued to climb, highlighting the increasing importance of megacity growth over regional trends.

“Our Interim Hotel Survey highlights once again that megacities are continuing to lead the way, resulting in regional trends becoming increasingly less meaningful,” said Margaret Bowler, director of global hotel relations, HRG. “Demand is still growing and is yet to peak and with occupancy at record levels in the world’s top business destinations, hotels are feeling confident in the strength of the market.”

The balance between price, location, quality and availability will continue to drive the market throughout 2014, HRG said earlier. However there are still opportunities for clients to secure savings if they are open-minded. By consolidating their program and by building meaningful, long-term working relationships with hotel groups, clients will be better placed to navigate the sometimes volatile market place, Bowler said.

“Furthermore, data and understanding how to use it is becoming increasingly important in the corporate travel industry and none more so than within the hotel sector. Bigger volumes don’t necessarily mean a better price, which is driven by other factors such as the day of stay,” she noted. “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 week they are staying, improving their position to deliver the best results from their hotel program.”

Despite the fact only eight out of 50 cities witnessed an increase in ARR when measured in Great Britain pounds (GBP), large movements in the exchange rate against the pound ensured that 31 of the top 50 cities saw an increase in local ARR.

Moscow retains the top spot in the Hotel Survey for the 10th consecutive year despite a 5 percent ARR decline measured in pounds. However, large exchange rate movements locally against the pound translated to a 16.3 percent rise in the local ARR.

Every region except for Asia Pacific witnessed a decline in ARR compared to the same period a year ago, however cities within each region continue to see large discrepancies. This highlights that regional performance continues to be less important compared to megacity performance.

Key markets in the oil and gas sector such as Aberdeen and Houston continue to benefit from a booming industry coupled with a lack of new openings. These markets have proven extremely resilient in recent years and demand is likely to continue to drive up ARR despite new room inventory coming online.

The recovery in the financial services sector continues apace with seven of the top 10 global financial centers experiencing local ARR increases, with two remaining static and just one falling slightly.

The UK experienced a very positive first six months of 2014 with ARR increasing in eight of the top 10 cities. This translates considerably well compared to the same period last year when only three cities saw ARR increases. London continues to see steady increases in ARR, propeling the city to 12th place from 22nd in last year’s survey.

Increased demand as a result of the FIFA World Cup coupled with significant exchange rate movement meant that Sao Paulo and Rio de Janeiro topped the survey for increases in local ARR at 29 percent and 17 percent, respectively.

Chennai and Mumbai both experienced multiple new hotel openings, coupled with softening domestic demand resulting in local ARR falling significantly in both markets, down 14 percent and 11 percent, respectively. However, the IT industry effect and lack of new openings in Hyderabad provided a cushion against the turbulence experienced in India with the city witnessing an increase in local ARR of 15 percent.

North America witnessed mixed results with severe weather in the first quarter pegging back demand in markets such as New York, Philadelphia and Chicago. However, Boston saw continued corporate demand and lack of openings drive up ARR by 8 percent while in San Francisco demand still outstrips supply, a situation likely to continue for quite some time.

What do they say?

“The market is becoming more competitive. More hotels are offering value on rates. At the same time as customers develop more sophisticated tastes, expectations are growing. The trend is a good thing overall as it pushes all (hotels and restaurants) to work to become better and better. This in turn is good for Hangzhou as a destination, which will support healthier business in the long run for those that can deliver.”

— Mark Foxwell, general manager of Hyatt Regency Hangzhou

“There is intense competition among Hangzhou hotels nowadays. Landison Plaza Hotel Hangzhou has launched a flexible pricing strategy in the MICE sector to satisfy different demands. On the other hand, our hotels also provide different services to attract customers. For example, Landison Longjing Resort Hangzhou organizes tea-picking tours to promote traditional tea culture. We also offered an afternoon tea combo with our Western chefs teaching children how to make desserts. In addition, both of our hotels have also started organizing family parties. We cooperate with distinctive professional institutes in Hangzhou to host theme parties that can be for everything from birthdays to a graduation celebration.”

— Louise Zhao, general manager of Landison Plaza Hotel Hangzhou and Landison Longjing Resort Hangzhou




 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend