BTN Europe presents an overview of business travel and MICE predictions for this year
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No sign yet of stability
Hotel rates are still falling and there is still "some way to go before" before they stabilise, the Hogg Robinson Group (HRG) said in its new hotel survey out today (August 6).
The survey, covering the first six months of 2009, found that rates in 12 key cities around the world fell in both the first and second quarters of the year.
This included London, where rates fells 4% in Q1 and 3% in Q2, New York 20% and 27%, Paris 7% and 14%, Zurich 19% and 27% and Hong Kong 16% and 24%.
But the fall in business travel has allowed corporates to negotiate better rates for their travellers, HRG said.
Margaret Bowler, HRG's director of global hotel relations, said: "The shift in business practices has been substantial and those that adapt well can reap benefits from the unusual trading environment.
"Hotels are adopting sensible pricing in order to maintain current occupancy levels.
"Our clients still want to travel and we are helping them find the best and most effective ways to cut costs, identifying alternative travel options to help manage and reduce corporate travel budgets."
HRG said the survey showed that corporates are travelling more smartly and were looking to control costs and maximise the return on their spend.
Corporates were "continually reviewing and consolidating their programmes to secure lower hotel rates by delivering increased revenues to their preferred suppliers," the TMC said.
Corporates were also able to negotiate added-value items within their rates such as food and beverage discounts, free Wi-Fi access and reduced parking charges.
HRG added: "Significantly, last room availability (LRA) is now considered by many as standard, having only been available at a premium prior to the slowdown in the market.
"However, as hotels are still managing to achieve high occupancy levels in certain cities and at peak times of the year, HRG continues to advise clients to renegotiate favourable deals on a regular basis, ensuring adequate allocation in high volume locations."
In the survey, Moscow again topped the poll for the world's most pensive city for hotels, despite a 14% drop in average rates.
HRG said the fall was due to a drop in demand from within the banking and finance sectors, combined with an increase in supply from new openings in recent years.
But Abu Dhabi emerged as the second most expensive city with a rate rise of 38%.
Paris, New York, Geneva and Hong Kong all featured in the top ten most expensive cities.
But London again did not feature among the most expensive cities, dropping from 16th in 2008 to 23rd this year.
One other surprising finding was that the top end of the market, the five-star accommodation, enjoyed an average rate increase of 7.7%, "suggesting hoteliers are holding out for rates at the expense of lower occupancy levels," HRG said.
In contrast the budget hotel sector came under pressure from the three- and four-star properties.
HRG said the sector had been "squeezed due to its inability to respond more rapidly and at short notice in terms of flexible pricing to offer more competitive rates to suit market needs.
"The introduction of new mid-market brands into key European cities continues, benefiting the 4 star sector and providing greater diversity and choice for the business traveller."
Ms Bowler said: "Despite the overall downturn in rates across the board, the industry is doing a great job of restructuring and adapting to the market conditions.
"The hotel industry appears to have learnt its lesson from the last downturn.
"They are adjusting pricing structures to meet market expectations and to make rates appear more attractive.
"In turn, corporates are reviewing and consolidating their programmes to secure lower rates because there is more availability."
But she added: "The market is incredibly difficult to predict, but in light of the economic climate, and consistently unfavourable exchange rates, we know that more businesses are looking at ways to control travel expenditure."