The Hogg Robinson Group (HRG), a corporate
travel services company, has released its 2010 Global Hotel Market
The data, which covers the entire year of 2010, shows that
much of the increase in hotel rates occurred in the Asia Pacific -
an indicator that the region may have fully recovered from the
global recession. Key trends from the update:
Singapore's average room rate increased by 14%. This surge is a
reflection of the
increasing number of visitors to the country,
which totalled 11.9 million in 2010 according to the Singapore
Tourism Board. The city's increase in room rates is higher than
that of Shanghai (2%) and Beijing (-10%). Singapore's positive
performance is an indication of its full recovery from the
recession and its re-emergence as a key financial centre in Asia.
- Moscow, for the sixth consecutive year, continues to be
the city with the highest average room rates globally, although
its rates experienced a 3% decline in Great Britain Pounds, or 12%
decline in local currency, year on year.
- The Middle
East experienced the greatest regional decrease in average room
rates due to enduring economic problems in the area. Abu Dhabi,
which last year was ranked second in the highest room rates,
dropped to 19th place with a rate decrease of 25%. Manama's average room rates fell by 10%, Doha's decreased by 10% and
Dubai's rates decreased by 5%. Only Riyadh's average room rates increased, by 2%.
HRG's full year survey is based
on a combination of industry intelligence, actual room nights
booked and rates paid by its UK clients during January to December
2010 compared to the same period in 2009. The GBP exchange rate is
based on the average for the period 1 January to 31 December 2010
versus the average during the same period in 2009.
Stewart Harvey, Commercial
Director at HRG, said, "As HRG experiences a return in business
travel volume and hotel prices increase, many corporate clients
are determined to retain control of their travel spend. The tight
business travel policies and budgets from the last few years have
remained in place and corporations have adopted improved
compliance controls and sharper forecasting models. Particularly
with hotel business bookings worldwide, corporations need
dependent data tools in order to understand their expenditure and
ensure strong negotiating power. HRG is committed to providing
reporting services that provide accurate data and good analysis to ensure that this is a reality and a benefit for our clients."
Margaret Bowler, Director of Global Hotel Relations at HRG,
added, "Of the 75 cities we surveyed, more than half recorded room
rate increases, reflecting the improving - albeit tentative -
levels of business confidence. Of course, particular countries and
regions are emerging quicker than others from recession but there
are definite signs of increasing room rates, which go hand in hand
with increasing business travel. HRG continues to advise its
clients on how to get the best from their travel budgets."
Douglas McWilliams, Chief Executive of cebr (the Centre for
Economics and Business Research ltd.), a leading economic think
tank who analysed the HRG survey, said, "The global economy
recovered strongly in 2010, powered by the emerging markets. The
latest HRG Hotel Survey illustrates how the upswing has bolstered
hotel prices, particularly in the fast growing emerging markets in
the South and East as economic power moves away from the West.
"Resource rich economies, such as Australia and Canada, saw
large gains in hotel prices reflecting healthy recoveries in their
economies and accompanying currency appreciation, but generally
the recovery in advanced economies has been more muted. Many of
the crisis-hit cities in Europe saw hotel prices decline in 2010
with falls in Athens, Dublin, Lisbon and Madrid as the sovereign
debt crisis and fiscal austerity programs hammered the economies
of Greece, Ireland, Portugal and Spain respectively.
the United Kingdom, the economic recovery in 2010 was reflected
clearly in the hotel market as hotel prices returned to growth following sharp decline in 2009 but there are wide variations
across the regions with cities more reliant on the public sector
experiencing declines in price."
Average room rates in the top ten most expensive cities
vary significantly when compared to the same period in 2009.
Several countries have dropped out of the top rankings, with new
additions from Europe, Asia and the Middle East. Despite having
the highest average rates globally and the uncertainty of the
current market, all destinations except Moscow, Paris and Doha
reported rate growth when measured in local currency.
Moscow continues to attract the highest rates, despite a 12%
decline in local currently and a 3% decline in GBP against the
previous year. It is an important business destination but new
hotel openings and its dependence on the finance sector resulted
in lower average room rates.
Abu Dhabi, Manama, Milan,
Copenhagen and Athens were listed in the 2009 top most expensive
cities, but in 2010 they have been replaced by Zurich, Hong Kong,
Stockholm, Doha and Riyadh. Abu Dhabi, which held second place
last year, dropped to number 19 as the country continues to
experience economic difficulties prevalent in the region and hotel
supply increases. Stockholm has moved up to position 8 due to
increased market demand in the city.
While GBP rate increases in Brisbane, Sydney and
Johannesburg seem high at 32%, 21% and 17% respectively, it is due
partly to the fluctuating Australian Dollar and South African Rand
exchange rates. With the exception of Brisbane, when measured in
local currency, the average rate growth was single digit.
The European cities of Copenhagen, Luxembourg and Dusseldorf all
experienced a rate decline. In contrast, Seoul's increase was due
to some recovery in the sector.
"Room rates in cities in
resource rich economies of Australia and Canada have generally
fared better in latching onto the robust return to growth than
other advanced economies," said cebr. "In Brisbane the rise can be
attributed to the buoyant mining sector, whereas Sydney's shortage
of hotels resulted in increased occupancy levels, pushing average
Key Global Focus Cities: 2010 vs. 2009
global focus cities demonstrated a considerably better year
compared to 2009, when all were in negative growth. The best performances were seen in Hong Kong, Zurich and Singapore. This
was primarily due to 2010's resurgence in business travel from the sector and continued investment.
Although Dublin reported
the highest rate of decline at 7%, its performance was
significantly improved from its 2009 rate of a 21% decline.
Frankfurt and Dubai each reported a 6% decline, due to the slower
recovery and reduced demand from the financial sector.
Key global focus cities, quarterly GBP average room rate
movement: January - December 2010
With the exception of London, the key global focus cities
all achieved rate growth in the final quarter. New York City
recorded the strongest and most consistent rate growth,
particularly in the fourth quarter at over £240, which was a 13%
increase from the previous year. The US was relatively stable year
on year and New York's growth is the result of high demand in the
Although Hong Kong experienced a dip in the third
quarter, primarily due to exchange rate fluctuation, it
demonstrated resilience in other quarters resulting from increased
market demand. Both Amsterdam and Paris showed a steady, albeit
gradual, rate incline due to an increased demand in business
Average Room Rates
measured in GBP, HRG's data shows mixed results in the global
hotel market despite an improving economic climate. An average room rate increase recorded in four of the seven regions.
The highest regional growth was recorded in Africa, primarily
aided by positive growth in South Africa (16%), where
Johannesburg's average room rates rose 17%, and Nigeria and Kenya
rose 13% and 11% respectively.
The Middle East & West
Africa (MEWA) had the highest regional rate decrease, which fell
-7.5% down to £13.06 per night. This reflected weak performances
in countries, such as Bahrain (-11%), Qatar (-10%) and UAE, which
was hit particularly hard by the financial crisis.
was also noted in the Asia Pacific region, due to cities such as
Hong Kong (12%), Singapore (14%) and Seoul (15%) experiencing a stronger recovery from the financial crisis due to their large
cebr also noted that while the UK
recorded an increase in room rates, Europe as a region painted a
gloomier picture with prices falling for the second successive
year as sluggish growth continued in many economies - with notable
exceptions including the strong recovery of Germany - and
sovereign debt concerns weighed on businesses and consumers.
rates globally were highly aligned to star ratings in 2010. Both
budget and 5 star hotels reported higher room rates, whilst 3 and
4-star hotels remained stagnant.
As budget accommodation
competed with the 3-star sector, it achieved a rate increase of
6.5% whilst 3-star hotels remained static year on year. However,
the ability of 3 and 4-star hotels to quickly offer package rates
and flexible pricing has resulted in cases where budget accommodation is not the least expensive option, as they do not
include added costs, such as breakfast and parking.
The 5-star sector recorded an average rate increase of 3.8%, proving
resilient to 4-star competition as corporate travellers return to
more expensive accommodation. This sector also benefitted from
strong performances in key destinations, such as the Asia Pacific and
MEWA regions, where hotel numbers are increasing.
Douglas McWilliams of the cebr said: "The 2010 HRG Hotel Survey
shows evidence of the economic recovery but fortunes vary across the globe. The recovery is being powered by growth in emerging
markets, with the advanced economies in Europe and North America playing a more subdued role. The HRG Hotel Survey illustrates this
pattern as the strongest growth in hotel prices across 2010 took
place in Africa and Asia Pacific, while hotel prices fell across
Europe for the second successive year. The UK bucked the trend
across Europe as hotel prices returned to growth with the economy
recording its strongest growth since 2007 in 2010.
Africa, Asia and the Pacific, average hotel prices are now above
pre-recession levels again as many economies have recorded a robust return to growth. The Chinese economy grew by 10.3% in 2010
as a whole, while India was on course for a similarly robust year having recorded 8.9% year-on-year growth in the third quarter of
2010. Overall, the volume of imports in emerging economies - an indication of growth in domestic demand across these markets -
rose by 22.1% over the twelve months to November 2010, compared with 9.6% growth across the advanced economies. Hence, it is
interesting to note that many of the strongest rates of growth in
hotel prices over 2010 are in cities within emerging markets.
Among the HRG top 75 global cities, hotel prices expanded strongly
in Johannesburg, Seoul, Singapore, Kuala Lumpur, Hong Kong,
Chennai and Istanbul.
"Hotel prices across Europe fell for
the second successive year as sluggish growth in many economies
and sovereign debt concerns weighed on businesses and consumers.
Hotel prices fell sharply in the bailed out economies of Greece
and Ireland: in Athens prices were down 9% in 2010 while in Dublin
prices sank by 11%. In Portugal and Spain, where market concerns
continue to simmer over the extent of public sector debt, high
unemployment and limited growth prospects in the face of fiscal
austerity, hotel prices also noticeably declined: in Lisbon,
prices decreased by 8% in 2010 and in Madrid prices were down by
5%. Other European cities such a Zurich, Stockholm, Geneva, Warsaw
and Oslo saw significant rises in hotel prices, reflecting a
better economic performance in countries where public finances are
in far healthier shape and healthy economic growth has returned.
"The UK economy recorded stronger-than-expected growth in
2010 and hotel prices returned to growth. Hotel prices rose by
1.7% following a sharp fall in 2009 following the recession.
Across the United Kingdom, some interesting trends emerge as
London led the recovery in hotel prices. Heathrow Airport and
London as a whole saw the strongest gains in prices with a 4.5%
and 2.8% rise respectively. Within the European Union, Heathrow
saw the third highest growth rate in hotel prices. In general,
business surveys have shown London and the South East, with its
large private sector and lesser reliance on the public sector, to
be recovering reasonably well. In contrast, many cities in regions
that are more dependent on the public sector for economic activity
have seen further declines in hotel prices in 2010.
US recovery gathered pace in the final quarter of 2010 and the
economy expanded by 2.9% in 2010 following a 2.6% decline in 2009. However, there are ongoing concerns over the strength of the
recovery; leading the Federal Reserve to pump an additional $600
billion into the economy in November 2010. In line with this,
United States' average room rates showed some recovery, with the 8
US cities in the global top 75 experiencing average 2.3% growth in
hotel prices. This growth was notably above Europe but below the
pace of recovery in emerging market cities such as Singapore and
"The resource rich economies of Australia and
Canada have generally fared better in latching onto the robust
return to growth than other advanced economies. Both the
Australian Dollar and Canadian Dollar have appreciated
significantly over the last 12 months and their economies recorded
growth in the region of 3.0% in 2010, reflecting a healthy
recovery. In line with this, the HRG Hotel Survey shows Brisbane,
Sydney and Montreal recorded the strongest growth in hotel prices
across 2010 among 75 top global city locations."
Middle East and West Africa, room rates declined across 2010 as a
whole. However, more recent data has pointed to recovery. For example in the final quarter of 2010, room rates in Dubai were up
by 9.5% year-on-year. This compares to a 20% annual decline in the first quarter. Economic growth in the region is expected to
surpass typical Advanced Economy growth in 2011 and 2012."
Margaret Bowler of HRG added, "Average hotel room
rates increased in most cities as a result of increased demand in
the business travel sector. Hotels were able to up-sell to
executive suites and drove up costs as a result. Although this is
a positive sign for the global economy, it does mean that
corporates must still continue to look for savings. 2010 was the
year of change, with increased demand and average room rates
rising in the majority of cities. We expect 2011 to be
challenging. There will be corporate demands for continued savings
and increased capacities in a number of key markets."
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