Global hotel market stabilizing, Hogg Robinson study finds

WORLDWIDE The global hotel industry has shown signs of recovery in the first half of 2010, according to the biannual hotel survey conducted by corporate travel services firm Hogg Robinson Group.

Although the survey reveals a fragmented global picture, the hotel market in Europe and the United States appears to be stabilizing, as rates are either flat or only marginally down. Twelve of the 50 cities surveyed achieved a year-on-year rate increase, and while the Middle East region recorded the highest rate decrease, double-digit falls were seen in the UAE, Bahrain, Qatar and Oman.

Many Europe cities saw average rate growth, such as Stockholm (13%), Zurich (7%) and Geneva (5%), and five of the top 10 most expensive cities worldwide were in Europe: Geneva, Paris, Zurich, Stockholm and Oslo. London posted a 1% increase in average rate in the first six months of 2010, after a 4% decline in 2009. The increase was driven by a significant boost to corporate occupancy levels and buoyant demand from the leisure sector.

Moscow yet again retains its place as the city with the highest average room rate for the sixth year, despite a fall of 12% when measured in local currency. Geneva and Hong Kong were the second and third most expensive cities respectively.

Abu Dhabi rates fell by 26% in sharp contrast to the 38% growth in average rate recorded in the first half of 2009.

Rates in the United States were flat or marginally off compared to 2009 figures, with the exception of San Francisco, where average rates fell by 11%.

Globally, the top end of the market continues to hold up well, with an average rate increase of 1% in 5-star hotels.

“It is good to see the positive effect of certain sectors traveling more regularly, however it is clear that the rate of recovery is mixed and varies according to region, country and specific markets,” says Margaret Bowler, director of global hotel relations at Hogg Robinson. “The challenge now facing hoteliers is to increase rates in line with demand to pre-recession levels, something which many forecasters believe will not happen until 2012 at the earliest.

“Expectation is high for further recovery in rates, and the big hotel groups are understandably working to return their rates to pre-recession levels. HRG has witnessed companies reviewing and consolidating their travel programs to secure lower hotel rates through increasing their market share with a preferred hotel supplier. We continue to help corporates navigate a complicated market and ensure business travelers have the best hotel deal.”

The full report from Hogg Robinson, including breakdowns by region, can be found here.