With the increase in airfares, coming airline capacity cuts and high-priced gasoline, it seemed only a matter of time that hotel rates would fall or at least level off to make lodging more affordable for both business and leisure travelers. Over the first half of the year, hotel prices halted their double digit upswing.
Earlier, I suggested that hotel rates would be dropping. Now major surveys have been released that validate my predictions.
According to a six month survey of hotel prices across the United Stated conducted by HRG, a corporate travel services company, lodging costs have remained stable during the first six months of 2008. After increasing by as much as 8 – 14 percent in 2007, the hotel world appears to be coming to a soft landing with actual price reductions possible as the economy softens and business travelers begin to shift from high-priced luxury properties to lower star levels for their contracted corporate travel rates.
“North America is the first region worldwide to see rates start to level off, with larger decreases expected in the second half of the year.”
“In light of the current economic climate, more businesses are looking at ways to control travel expenditure and are increasingly traveling smarter – completing one day meetings where practicable or considering alternative solutions such as video conferencing. We are also seeing clients who traditionally book five star hotels re-considering their travel policies and moving to four star hotels in order to maximize savings.”
Orbitz also released a survey today that showed while overall figures show a 5 percent increase in hotel rates, many areas of the country are seeing decreases in lodging costs. New York City, Boston, San Francisco and Dallas are all seeing a decrease in corporate spending and a softening of hotel rates.
Smaller cities like Pittsburgh, Tampa, Toronto and Washington, DC that didn’t seen the furious hotel construction boom of the past few years still have tight room markets and are not showing signs of lower prices.
Overall, it seems that the run-up in lodging prices is reaching an end. The drop in airline capacity coming during the last three months of this year will put even more pressure on hotel prices and will allow leisure travelers room for savings on domestic travels and business traveler managers will find an easier negotiation environment for their upcoming hotel bookings during 2009.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
