Limited inventory increase shifts pricing leverage back to hoteliers

WORLDWIDE Room demand from business travelers will continue to increase this year, American Express Global Business Travel predicts, and hoteliers are feeling more comfortable raising rates—particularly for corporate customers that request last room availability for their travelers.

Hotel rates in the fourth quarter reached their highest levels all year, with average booked rates of US$164 and US$244 for U.S. and international hotels, respectively, AmEx says.

“2010 marks the first year since the recession’s impact took hold in 2008 that there hasn’t been a decline in domestic hotel rates, showing the hotel industry is on the rebound,” says Christa Degnan Manning, director of research for American Express Business Travel. “We have already seen some hotels begin to raise their rates, especially in light of limited hotel development in the pipeline for 2011, finally putting hoteliers on stronger footing in the supply and demand equation.”

AmEx advises corporate travel buyers to gain as much volume discount potential with hotels as possible by driving spend to fewer properties and negotiating key amenities in their rates to help alleviate dramatic property level increases and incurring more ancillary fees if possible.

“Following a tough negotiation season when many hoteliers looked to significantly increase rates for 2011, companies must now focus on taking full advantage of any extra services that were included in corporate negotiated rates this year,” she says. “While it is easy for a sales person to promise amenities to hit their base rate targets, companies must audit to make sure those services are not being billed at an extra charge on checkout.

“Internet access, meals, business services and parking are all features that many road warriors look forward to utilizing for productivity purposes, and travel managers must make sure employees take full advantage of these add-ons so the company is truly getting the best value from its travel budget and travel management efforts.”