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Rising hotel prices reflect need for corporates to consider intelligent sourcing

New research by Hotel Solutions Provider HRS has revealed that hotel rates in each of the UK’s top destinations have seen increases compared to Q3 2013, showing that confidence is returning to the British economy. However, whilst this is good news for hoteliers, HRS suggests that corporates should review their travel policies to get the best rates.

London has remained Europe’s most expensive capital to stay in for the last three quarters of 2014, seeing an increase of more than 17 per cent, compared to Q3 in 2013.

Average room rates in London are now reaching nearly £134. This places the UK’s capital ahead of Zurich and Copenhagen which have average room rates of £119 (€152) and £111 (€142) per night respectively.

Another capital city, Edinburgh, keeps hold of its position as the second most expensive in the UK (£119) after seeing a significant increase of almost 18 per cent in average room rates compared to this time last year.

Interestingly, the Welsh capital also increased by over 18 per cent compared to Q3 2013, but still manages to offer the cheapest option for bargain hunters, with room rates costing an average of £81 per night.

Leeds has seen the biggest growth with a 27 per cent increase in room rates compared to the same period last year, with rooms averaging £84 per night.

Jon West, Managing Director of HRS for the UK and Ireland, said: “The UK is on track to be the fasting growing G7 economy this year and this could be reflected in the price increase of hotel rooms across the nation. Thanks to the economic recovery, tourism is picking up again and it appears businesses are also starting to feel more confident in sending employees back out on travel.

“Regional capitals are often popular destinations which can explain the rate development in London, Edinburgh and Cardiff. Leeds’ room rates could have increased thanks to the legacy of Tour De France which kicked off in Yorkshire this summer and attracted much media attention, showcasing the area to potential visitors.

“Whilst this spells good news for hoteliers, it reinforces the fact that now’s the time for those responsible for buying travel to review the effectiveness of their hotel programmes to ensure that their companies really optimise their hotel procurement and make substantial savings. 

“Leveraging a single platform to tackle the entire procurement chain drives greater efficiencies, improved visibility and ultimately greater savings. With our Intelligent Sourcing offering, we are well placed to provide above-average response quotes thanks to our extensive global network. Having local market managers abroad involved in international negotiations gives us the upper hand in terms of coping with time differences, language barriers and regional outlook.”

Room rate growth in Europe much lower than UK
After London, the most expensive capitals in Europe are Zurich (€152) and Copenhagen (€142); both are notoriously costly places to visit for tourists.  

The largest increase in room rates was seen in Madrid (€92), Lisbon (€92) and Berlin (€90), where the room rates increased by 19, 11 and six per cent respectively.  

However, the overall outlook for room rates on the continent was considerably less positive than the UK. The average room rate development across the top 21 destinations in Europe was just two per cent, compared to 17 per cent in the UK. Jon, said: “Whilst low, the development in room rates shows a glimmer of hope for growth in the European economy – hopefully this will improve as we move into 2015.”  

City travellers found the cheapest deals in Prague – averaging just €69 per night. Research also showed that visitors to Warsaw and Budapest can take advantage of moderate room rates and maximise business travel expenditures at just €71 per night.  

Amsterdam, Moscow, Oslo and Stockholm have also seen drops in room rates in the last quarter compared to Q3 2013.

New York is the global frontrunner, followed by Boston and San Francisco
Hotel room rates decreased in just four out of the 19 top international destinations, compared to Q3 2013, reflecting overall uplift across the global marketplace.

New York remains the most expensive city to stay in, with rooms averaging £168, which is up seven per cent compared to the same period last year. This is followed by Boston and San Francisco, where hotel owners set their rates at an average £158 and £152 respectively.

Meanwhile, San Francisco and Chicago saw the biggest increase in room rate, both averaging 17 per cent. Recent news reports have said that the long-term unemployment level in the US has finally fallen and this, coupled with other factors such as the tech boom in San Francisco, could account for this uplift as businesses look to expand.

Asia remained the most inexpensive continent to visit; for one night’s stay in New York, travellers could have booked three nights in Kuala Lumpur (£53). Bangkok saw the most dramatic decrease over the past 12 months (nine per cent), which could be attributed to civil unrest and attacks on travellers massively affecting tourism to the area.

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