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HRG’s Interim Hotel Survey

09 September 2014

Hotel room rates, particularly in “Megacities”, have continued to grow in the first six months of 2014, according to the latest Hotel Survey from award-winning international corporate services company, Hogg Robinson Group (HRG). Despite key factors such as the strengthening of the pound subduing room rate increases in GBP, 31 of the top 50 cities saw an increase in local Average Room Rate (ARR). Occupancy in key business destinations remains at record levels and is continuing to grow, highlighting the increasing importance of Mega City growth over regional trends.

Key findings from the survey:

  • Despite only eight out of 50 cities witnessing an increase in ARR when measured in GBP, large movements in the exchange rate against the pound ensured that 31 of the top 50 cities saw an increase in local ARR
  • Moscow retains the top spot in the Hotel Survey for the tenth consecutive year despite a 5% ARR decline in GBP (£250.98). However, large exchange rate movements locally against the pound translated to a 16.3% rise in the local ARR
  • Every region except for Asia Pacific witnessed ARR move back compared to the same period a year ago, however cities within each region continue to see large discrepancies. This highlights that regional performance continues to be less important compared to mega city performance
  • Key markets in the oil and gas sector such as Aberdeen and Houston continue to benefit from a booming industry coupled with a lack of new openings. These markets have proven extremely resilient in recent years and demand is likely to continue to drive up ARR despite new room inventory coming online
  • The recovery in the Financial Services sector continues apace with seven of the top ten global financial centres experiencing local ARR increases, with two remaining static and just one falling back slightly
  • The UK experienced a very positive first six months of 2014 with ARR increasing in eight of the top ten cities. This translates considerably well compared to the same period last year where only three cities saw ARR increases. London continues to see steady increases in ARR, propelling the city to 12th place from 22nd in last year’s survey
    Increased demand as a result of the FIFA World Cup coupled with significant exchange rate movement meant that Sao Paulo and Rio de Janeiro topped the survey for increases in local ARR at 29% and 17% respectively
  • Chennai and Mumbai both experienced multiple new hotel openings, coupled with softening domestic demand resulting in local ARR falling back significantly in both markets, at -14% and -11% respectively
  • However, the IT industry effect and lack of new openings in Hyderabad provided a cushion against the turbulence experienced in the India market with the city witnessing an increase in local ARR of 15%
  • North America witnessed mixed results with the severe weather in Q1 pegging back demand in markets such as New York, Philadelphia and Chicago. However, Boston saw continued corporate demand and lack of openings drive up ARR by 8% while San Francisco is still experiencing demand outstripping supply, a situation that is likely to continue for quite some time

The HRG View: Margaret Bowler, Director Global Hotel Relations

“Our Interim Hotel Survey highlights once again that Megacities are continuing to lead the way, resulting in regional trends becoming increasingly less meaningful. Demand is still growing and is yet to peak and with occupancy at record levels in the top business destinations, hotels are feeling confident in the strength of the market.

“As our survey concluded in February, the balance between price, location, quality and availability will drive the market throughout 2014 and that continues to be the case; however there are still opportunities for clients to secure savings if they are open minded. By consolidating their programme and by building meaningful, long-term working relationships with hotel groups, clients will be better placed to navigate the sometimes volatile market place.

“Furthermore, data and understanding how to use it, is becoming increasingly important in the corporate travel industry and none more so than within the hotel sector. Bigger volumes doesn’t necessarily mean better price, which is driven by other factors such as the day of stay. By being smarter with their data clients will be more effective in understanding the total cost of stay at a hotel, such as their incremental spend and the night of a week they are staying, improving their position to deliver the best results from their hotel programme. “

About HRG’s Hotel Survey

Now in its 21st year, HRG’s biannual hotel survey looks at hotel room rates for key business destinations across the world to provide a dynamic insight into global business travel behaviours.

The full HRG Interim Hotel Survey is available here.

For further information, please contact:

Sallyanne Heywood
Hogg Robinson Group
Tel: +44 (0) 1256 312 688

Ed Vincent
Hogg Robinson Group
Tel: +44 (0) 1256 312 671

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