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The global trend of rising hotel room rates set to continue

By: Kalon Huett
16 March, 2012

Worldwide hotel room rates may be set to rise further in 2012 if the upward trend from last year continues to gain momentum.

According to the most recent Hotels.com Hotel Price Index (HPI), business travel market stability helped to boost the average room rate around the world by four per cent in 2011, with even stronger results recorded in Australian cities. 

While prices generally remained lower than 2005 levels, the marked increase represents the potential for greater gains for hospitality industries moving forward.
 
The HPI is calculated based on actual prices people pay year-on-year for hotel rooms worldwide.
 
In 2011 this figure rose eight per cent in the Pacific, five per cent in North America, four per cent in Latin America, three per cent in the Caribbean and two per cent in both Europe and the Middle East.
 
The only region to suffer a dip in rates was Asia at two per cent.
 
Such positive overall results follow a 13 per cent fall in 2009 - and reflect "a continuing trend of steady recovery", according to Hotels.com.
 
Company president David Roche said: "The hotel sector is a good barometer for the global economy as a whole. 
 
"Prices are up because demand for rooms is on the rise – a sign of higher levels of business and consumer spending. 
 
"Local conditions, influenced last year by political uprisings, natural disasters and currency fluctuations, do have a major impact on prices but, overall, the momentum is there and the market is growing."
 
Perth room rates rose nine per cent in 2011 to $166 on average per night - well above global trends.
 
Many analysts expect this situation to continue rather stagnate in the medium term.
 
Chief executive of 8Hotels Paul Fischmann believes with Australian hotel rates traditionally lower than most international markets, room prices in most parts of the country are unlikely to recede. 
 
"We have scope for more growth because there is limited new hotel supply in most markets in Australia, and there are certainly some markets where it's hard to see room rate growth subsiding, like Sydney, Perth and Brisbane," Fischmann told The Australian.
 
In addition, unexpected circumstances can have an impact on accommodation costs, with the floods in Brisbane and the earthquake in New Zealand's South Island directly leading to price rises on the back of dramatically lowered room supply.