In a preliminary outlook report about corporate hotel rate negotiations in the U.S., Dr. Bjorn Hanson says buyer and seller expectations for corporate and contract rates for 2012 is as far apart as ever before — even more than last year.
Hanson, divisional dean and clinical professor at NYU’s Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management’s School of Continuing and Professional Studies, said the emerging hotel executive consensus outlook for 2012 is for corporate contract rates to increase by 6% to 8%, but many corporate travel managers are planning for increases of 3% to 5%.
Hanson reported that a preliminary estimate for the result of negotiations is for an average increase for corporate rates around 5% to 6%, depending on location and the number of room nights for a specific buyer.
These estimates are based on selected interviews with industry executives and corporate travel executives, analysis of industry financial data, press releases, and information available on hotel and brand websites.
Hotel executives also are seeking to charge separately for some services and amenities as they had in the past, in addition to implementing rate increases. In recent years, contract rates included services and amenities such as waiving charges for telephone access charges, fax charges (which can be difficult for some hotels with business centers operated by lessees and would require hotels to pay for the service for guests), fitness centers, breakfast, local transportation, and others.
One response of buyers to higher rates is to reallocate the portfolio of contract rate hotels to include more upscale, select-service, and limited-service hotels.
For 2011, the average negotiated rate increased approximately 4.5%, which is greater than what will be achieved by U.S. hotels based on year-to-date performance.
What makes this disparity even more meaningful is the fact that corporate contract rates represent almost 20% of occupied room nights and almost 30% of U.S. lodging industry revenue, according to Hanson.