Global hotel prices stabilised in the first half of 2010, but after seven consecutive quarters of price falls, were still at levels seen six years ago, according to the latest Hotel Price Index.
According to Hotels.com, the average price of a hotel room rose two percent in the second quarter of 2010, the first rise since the end of 2007.While prices in all regions were either flat or down year-on-year in the first three months of 2010, by Q2 prices had risen one percent in Europe and the Caribbean, three percent in the Americas and had stabilised in Asia.
“There is considerable worry about the fragility of the economic recovery and the possibility of a double-dip recession. Hotel pricing trends, up to the end of Q2 of 2010, confirm that a stabilisation has indeed been under way in the hotel industry, and that there are hints of a recovery. Hotel prices appear to have hit the bottom in the first half of 2010, and have lately trended up 2% against the prior year, the first time prices have risen since 2007,” said David Roche, global president of Hotels.com.
“If indeed we’re seeing the beginning of a true recovery, it is an uneven recovery, and one starting from a low base. Prices remain at levels not seen since 2003 or 2004 in much of the developed world – the Asian-Pacific region is the only one to show any significant growth. Business capitals of the world such as New York, London and Singapore are seeing significant price rises again – but this is not mirrored in other capitals (Dublin hotel prices fell 6% and Moscow fell 8%).”
In 2010, the key factors acting to stabilise and even improve hotel pricing are the return of corporate travel (more pronounced in North America than in Europe), the general improvement in macroeconomic conditions and the slowing down of additional new room capacity.
“We’re seeing travel bookings pick up around the world,” said Victor Owens, vice president of marketing, North America for Hotels.com. Owens added, “It’s stimulating to see not only the breadth of travel both domestic and international, but also the steady rise in hotel prices which is helping reinvigorate the industry. There are, of course, still deals to be had, especially in international destinations like Abu Dhabi, Dubai and Reykjavik which each saw a major drop in hotel prices during the first half of 2010.”
North American prices show modest signs of recovery
•Prices paid by travelers for hotel rooms in North America (the U.S. and Canada) rose 3 percent between Q2 2009 and Q2 2010. The North America HPI stood at 101 in Q2 2010.
•This was the first quarter in which prices rose (year-on-year) since the end of 2007. Stronger demand, both from domestic and business travelers, has given hoteliers the confidence to hold their prices and maybe start raising rates.
•Prices for hotels in the Caribbean rose by 1 percent year-on-year in Q2 2010 – again the first signs of rates increasing since the end of 2007. This meant that the Caribbean HPI stood at 100 – a recovery back to the average rate of 2004 and a sign of just how far prices had dropped during the global downturn.
•Prices across Latin America also rose by 3 percent in Q2 2010 when looked at on a year-on-year basis.
European prices start to recover in 2010
•Prices paid by travelers for hotel rooms in Europe rose 1 percent between Q2 2009 and Q2 2010 (they were flat between Q1 09 and Q1 10).
•Prices had fallen for seven consecutive quarters, from Q2 2008 to Q4 2009, so this indication of rates improving will be encouraging for hoteliers.
•The Hotel Price Index for Europe stood at 101 in Q2 2010 as a result of the modest price gains. That means that hotel rooms are now 1 percent more expensive across Europe than they were in 2004, when the Hotel Price Index was started and 16 points lower than their peak in Q2 2007.
Asia – back to Q2 2009 levels, but with a varying picture across the region
•Prices paid by travelers for hotel rooms in Asia remained stable in Q2 2010 averaging 117 points, the same level as in Q2 2009.
•Overall, Asia’s Index in Q2 2010 stands at 117 points, markedly higher than when the Hotel Price Index was first started in Q1 2004. This is in contrast to every other region of the world where the Index has remained very close to the 2004 level of 100. This reconfirms the general growth in the Asian region and the increased demand for hotels in the region.
•The prices paid in Asia, and their pace of recovery, show clear variations across the region. Large business and convention hubs, like Singapore and Hong Kong, have seen rates go up on the back of returning corporate travel demand.