Hotels to raise rates from 2011

Nominal growth in rates this year, though nothing significant until 2013

Room rates are still priced some way under their 2007 peak. Looking at the expectations of major international chains, experts think they will climb slowly but steadily over the coming year before larger price increases are introduced from 2012. Improving market conditions as well as the lack of new hotel construction in the US and Western Europe are encouraging leading hotel operators such as Marriott International, Hilton Worldwide and Starwood Hotels and Resorts to introduce incremental increases in the average daily rates.

“We continue to see strength in pricing,” Arne Sorenson, Marriott’s president and chief operating officer. In what was seen as something of a gamble in the industry, Marriott was the first of the big chains to start selectively raising rates last year. Research companies are forecasting a rise in daily rates in the US of between 4.2 and 4.6 percent this year.

Larger increases of $10 or more are still a year or two away, however. “There is positive pricing power in the market because the demand fundamentals are a lot healthier,” said one analyst. “There will be nominal growth [in daily rates] this year, but nothing significant until 2013.” A sluggish recovery and high unemployment continue to restrict leisure and business travel in the EU and North America. For now, the planned rate increases will affect business rather than leisure travellers

Washington Post

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