Hotel ADR gains in North America in line with higher business demand

NORTH AMERICA The moderate increases seen in ADR at North America hotels are in line with increased demand as forecasted by American Express Global Business Travel.

Domestic hotel rates are averaging US$150 this year, up from US$146 a year ago and just shy of the US$152 seen in 2008. Internationally, ADR remains well below pre-recession numbers, at US$238 compared to US$260 in 2008, but still higher than 2010 (US$228) and 2009 (US$229).

“Hoteliers are likely to try to continue increasing rates particularly, as we head into the negotiating season,” says Christa Degnan Manning, AmEx research director. “However, companies that keep a close eye on market conditions and benchmarking actual rates paid in key travel destinations will be better positioned to maintain their discounts.”

Business travelers to San Francisco have seen the biggest hotel pricing bump in North America this year, up 16% to US$206. Other big gainers are Seattle (9% to US$152), Austin (8% to US$161), Omaha (8% to US$145) and New York City (8% to US$290).

Meanwhile, domestic airfares in North America have pushed past the pre-recession levels of 2008. “Airfare increases have been expected given the rise in the cost of oil and the return in demand in business travel,” Manning says. “On top of this, airlines are continuing to form alliances and joint ventures. As prices continue to increase and capacity levels remain tight, companies need to ensure they are following the market, reviewing travel spend and ensuring they are using suppliers and implementing policies that facilitate optimal cost savings opportunities.”

Average booked hotel rates, both international and domestic, represent the total spending of all American Express Global Business Travel clients, excluding taxes, divided by the total number of room nights confirmed. The full Business Travel Monitor includes hotel averages by major city neighborhoods and category of hotel by price range.