13 August 2009

Hotels learn lessons from tough times

SINGAPORE - The Asia-Pacific hotel market is still feeling the effects of the tough economic climate according to the bi-annual hotel survey conducted by Hogg Robinson Group.

Most regions are experiencing a decline in hotel room rates in local currency terms, with Abu Dhabi as the only exception.

With occupancy levels continuing to fall and rates reduced, corporates continue to consolidate their travel policies and negotiate more favourable corporate deals.Ã¢â¬~¨Ã¢â¬~¨

Margaret Bowler, director of global hotel relations at HRG, says: "The latest figures suggest that the industry has some way to go before rates stabilise.

"Despite the overall downturn in rates across the board, the industry is doing a great job of restructuring and adapting to the market conditions.

"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."

Trends noted by HRG include:Ã¢â¬~¨Ã¢â¬~¨

- Average room rates decreased in 3 and 4 star hotels as clients downgrade star ratings in purchasing accommodation. This has led to budget hotels battling to maintain their share of the corporate market.Ã¢â¬~¨

- The highest average rate increase of 7.7% was seen in 5 star hotels, suggesting that luxury hoteliers are holding out for rates at the expense of lower occupancy levels. This sector has performed particularly well in the Middle East/West Africa and Asia Pacific regions, where these properties are prevalent and increasing.

- Hong Kong experienced accelerated decline in quarterly average room rates in the first six months of 2009, worsening from 16% in Q1 to 24% in Q2.

- Abu Dhabi surged to 2nd in the top 10 list of most expensive destinations for corporate travellers, having only entered the chart in the 2008 six month survey.

- Mumbai tumbled out of the top 10 to 16th position after a stellar performance in 2008, its decline attributed in part to the terrorist attacks in November.Ã¢â¬~¨

- Moscow topped the chart as the most expensive destination for corporate travellers for the second year running. However, for the first time since the city entered the HRG hotel survey in 2005, the rate saw a year on year decline of 14%.Ã¢â¬~¨