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World's hotels are adapting to global recession, claims survey

13 August 2009 by
World's hotels are adapting to global recession, claims survey

The international hotel market is doing a good job in restructuring and adapting to the current global economic squeeze, concludes the latest biannual hotel survey from travel group Hogg Robinson.

While most regions have seen hotel room rates decline in local currency terms (with the exception of Abu Dhabi), the report found that hoteliers were adopting sensible pricing strategies to attract cost-conscious corporate clients.

Alongside lower pricing, hotels were offering added-value items such as food and beverage discounts, free Wi-Fi access, reduced parking charges, and last room availability (which was previously only available at a premium).

"The shift in business practices has been substantial and those that adapt well can reap benefits from the unusual trading environment," said Margaret Bowler, director of global hotel relations at HRG.

"The hotel industry appears to have learnt its lesson from the last downturn. They are adjusting pricing structures to meet market expectations and to make rates appear more attractive."

Five-star hotels appeared to be weathering the storm best (especially in the Middle East and Asia). They were achieving average rate increases of up to 7.7%, albeit at the expense of occupancy.

Budget hotels, however, were feeling the pinch from the three- and four-star sector as they proved less nimble in responding to demands for flexible pricing.

Most cities saw the decline in average room rates deepen in the second quarter in local currency terms (from an average 10.5% in the first quarter to 16% in the second).

London, however, bucked the trend by slowing the decline in average room rates in the second quarter. Events such as Wimbledon and Ascot brought an increase in demand while the weakness of Sterling made it a popular destination for business travellers.

Half-year profits slump by 38% at InterContinental >>

Mandarin Oriental hit by $35m slump in interim profits >>

Recession is worst since World War II, hoteliers told >>

Rates and revpar falling in upscale London hotels >>

By Angela Frewin

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