Business Travel Trends That Will Matter in 2011: Hotel Rates Skyrocket in Key Markets

With the new year underway, we’ve asked Elizabeth West to share some trends they’ve spotted at Business Travel Media Group —trends that they believe will affect your travel management programs this year. This article is part of a series that will cover increases in airline consolidation and the ever-increasing technology of smartphones.

Hotel rates have been skidding along the bottom of a deep trough for two years, and travel buyers have likely been enjoying the ride. While average daily rates are projected to rise only about 5 percent to 6 percent overall in 2011, the fun is over in gateway cities and other key markets, where hotel chains and independent properties are pushing for increases as high as 20 percent.

The upscale and upper-upscale segments, where rates had caved to plummeting demand, are coming back into play and getting aggressive in negotiations. Marriott, for example, was widely reported in late 2010 to be pushing for 10 percent increases on average, but higher in specific markets and for specific brands. In fairness, travel buyers should understand that losing five years of rate increases during the economic crisis—and maintaining that loss indefinitely—puts quality and service at a clear risk.

To pull the most aggressive rate increases down a notch, however, travel buyers should be prepared for a lengthy negotiation process—and may already be in one. Create competitive property sets by neighborhood—not by the city as a whole—and look at all appropriate hotels, whether they are in traditional competitive tiers or not. Another recommendation: travel buyers might want to consider dynamic pricing models this year.

Loading next article