HRG in the UK has unveiled the results of its most recent hotel survey demonstrating continued growth and a strong average rate performance for the hotel industry worldwide.

The UK’s leading travel management company has noted particularly that, for the first time and reversing a long standing trend, rate increases have been directly proportionate to a hotel’s star rating – the higher the star rating, the greater the growth in average rate achieved (see page 2 for detailed analysis).

Other key findings include:

• Moscow is once again highlighted as having the most expensive average corporate hotel rates worldwide (increasing 29% to £219.19).
• Mumbai has seen the highest increase in average rates (46%) amongst those cities surveyed
• All regions have recorded rate growth, with AsPac (Asia Pacific) region achieving the most significant increases whilst the UK market’s room rate growth has slowed slightly
• Corporate rates in Germany rose significantly due to the ‘World Cup Effect’
• Tactical rates have now all but disappeared, with any such rates that appear in periods of exceptionally low demand facing more restrictions and increasingly applying to leisure destinations.

HRG’s survey is based upon a combination of industry figures, actual room nights booked and rates paid by its UK clients during January-September (inclusive) 2006 compared to the same period in 2005.

Margaret Bowler, General Manager of Hotel Relations at HRG UK, commented: “The global hotel industry has once again seen significant growth in the first nine months of 2006 and has demonstrated a strong set of results in terms of average rate performance.”

Part 2: In-Depth Analysis

Increases in room rates across all star ratings

Reflecting the continued growth in the industry, average rates have increased year on year across all star ratings. HRG’s data reveals an increasing disparity of rates between the budget and 3 star, and 4 and 5 star sector hotels.

The survey has particularly highlighted that, for the first time, the higher the star rating, the greater the increase in average rate achieved. Five star market rates are up 15.2% on the previous year, compared to just 4.8% in the budget sector.

Margaret Bowler explained: “The budget sector has witnessed aggressive expansion with a resulting increase in rooms available and competitive pricing policies designed to maintain market share and secure new customers. We anticipate that the 5 star market will continue to perform strongly as major chains look to expand in key destinations worldwide including London, China, Doha, Dubai, Eastern Europe and Moscow.”

Top Ten Most Expensive Cities Worldwide

Moscow maintains its position as having the most expensive hotel rates for corporate travellers, with the rise in average room rates reflecting its growing importance as a business destination and the number of business travellers visiting the city.

Moscow currently suffers from a lack of ‘corporate quality’ hotels, with many hotels not offering the facilities required by the international business traveller. This is likely to be rectified in the near future as major hotel groups, keen to gain a foothold in this lucrative market, invest in high quality property development.

Rome retains a position in the Top 10 listing but is the only city surveyed to have recorded a double digit decrease in average rates, correcting the artificial increase seen in 2005 when the city experienced unprecedented increases in average rates and occupancy following the death of Pope John Paul II and the appointment of his successor.

Zurich is the only city mentioned in the 2005 survey not to have retained a place in the Top 10 listing: it fell from 10^th place in 2005 to 14^th place in the 2006 survey with an average rate of £135.01. Hong Kong enters the Top 10 for the first time, rising up the table to 5^th position in 2006.

Mumbai replaces Bangalore as the city showing the greatest average room rate rises. Significant rate increases in Singapore and Hong Kong are attributed to increased demand coupled with strengthening exchange rates.

Istanbul has achieved a strong performance in this latest survey, with rates increasing by almost a quarter. HRG’s own figures show that this increase can, in part, be attributed to strong demand from the fashion retail sector.

Margaret Bowler said: “All regions have continued to record growth in average room rates this year. The highest increases have been seen in Asia Pacific (AsPac), which is up by almost 20% (£17.67) per night. This is reflective of the significant growth recorded in India, Singapore, Hong Kong and Tokyo. Eastern Europe has also seen considerable growth with rates up 18% on last year’s figures. The lowest increase has been recorded in the UK which has only risen by around 5% or £5.25 per night.”

Focus country: Australia

“Rates in Melbourne were boosted as the city hosted the Commonwealth Games in March,” said Margaret Bowler.

“Having undergone substantial investment in the run up to the games, and with an estimated 900,000 visitors,the city saw an average rate growth in excess of 17% in the month of March. In contrast, average room rates in Sydney rose by half the national average. This weak performance can be attributed to the re-opening of a major hotel in the city following a refurbishment programme. “This hotel opening significantly impacted the number of rooms available and increased competition on prices.”

Focus country average room rates: Australia

Focus country average room rates: United States

Margaret Bowler commented: “Until recently the Americas have reported flat average rates. However, in this latest survey we have seen an upturn in occupancy and increased demand in key commercial cities, resulting in an average increase of 15% across the country.”

She continued: “New York, Boston and Chicago continue to benefit from high occupancy and average rates which we believe is fuelled in part by increased activity within the banking and finance sector.”

 Focus country average room rates: UK

With the exception of Birmingham (which has seen new hotel openings in 2006) all key provincial UK cities have recorded flat or increasing average room rates.

Manchester posted the highest percentage variance, up 13% on 2005 figures. The city has enjoyed considerable investment and is now recognised as a leading business destination being rated in the world’s Top 60 most successful conference destinations, according to the International Congress and Convention Association (ICCA).

Liverpool recorded the second highest rate increase. Margaret Bowler explained: “We are likely to see Liverpool hotels continue to achieve good performance over the next couple of years as the city has been selected as the European Capital of Culture for 2008 and should continue to attract interest. New hotel openings, combined with significant refurbishment programmes for many existing hotels, will result in a better standard of hotel accommodation for the business traveller in the long term.”

Focus country average room rates: Germany – ‘The World Cup Effect’

The German market experienced mixed fortunes in 2005. Average rates rose by under 5% from the period January to June – less than the average 6.2% increase seen in other European countries. However, the country’s results overall were, as expected, boosted by this summer’s World Cup with rates rising sharply for the duration of the tournament.

Key cities across Germany

Although 12 cities hosted matches for the FIFA World Cup, the ‘World Cup Effect’ was felt throughout the whole country. Without exception, all cities surveyed recorded substantial increases in average room rate. The lowest being Bonn (not a host city) with 8.5% and the highest being Stuttgart (31.5%), closely followed by Cologne and Dusseldorf at 30.7% and 27.2% respectively.

Many overseas supporters used Frankfurt as their point of entry to the country. As a key transport and finance hub, Frankfurt rates remained the highest (averaging £145.02) of all German cities.

Part 3: Summary

Margaret Bowler concluded: “The results of our survey show clear signs of strong growth in the hotel sector worldwide, especially in the Asia region (19.7% rate growth) and this is a trend that is set to continue over the next 12 months.

“Of continued significance was the average rate increase seen in the Americas. Demand has risen in key commercial cities and this has pushed rates up across the region.

“Looking to the hotel suppliers themselves, it is interesting to note that tactical rates have all but disappeared across the industry and that ‘flexible’ or ‘demand based’ pricing, whereby rates ‘float’ on a daily (or in some cases hourly) basis below agreed consortia/client rates, is now largely industry standard. It is likely that, over the next couple of years, some rate negotiations will centre around an agreed discount off the ‘floating’ rate. In the UK we are already trialling this with some of our corporate clients but ultimately the challenge for the industry lies in its ability to persuade clients that such a pricing model is in their best interests.”

“Finally, it is important to note that hotel suppliers are giving greater consideration to the ‘profile’ of the account in terms of value (i.e. the spread of room night volume over the week, length of stay and spend per stay). TMCs such as HRG can help clients analyse their hotel spend and programme, providing the hotel suppliers with the data they require to ensure that clients have access to the best rates and availability, helping to maximise their hotel spend in a growth market.”

- Ends -

For further information please contact:

Toby Doman / Alice Mayor
Euro RSCG Biss Lancaster
Tel: +44 (0) 207 467 9200
Email: blhrg@bisslancaster.com

Laurie Waugh, PR Manager
Hogg Robinson Group
Tel: +44 (0) 1256 312623
Email: laurie.waugh@hrgworldwide.com

Notes to Editors:

Hogg Robinson Group (HRG) is the award-winning international corporate services company. Founded in 1845, HRG has over 60 years specific corporate travel expertise. Its corporate services interests include wholly-owned or majority controlled corporate travel operations in 24 of the key driver and growth markets throughout Asia Pacific, Europe and North America.  Supported by contracted partners, the HRG worldwide network extends to 96 countries.

Totally committed to a value offering for clients, HRG offers a comprehensive range of corporate services which includes travel management, fulfilment services and low cost transactions as well as Consulting, Expense Management, Sports and Events & Meetings Management.