Whilst the media have been reporting on a global fall in hotel room rates over the past few months of economic crisis, rates in the UK have actually remained surprisingly stable, even though they are still marginally down on the previous year. In Europe and the rest of the world as a whole, it is still too early to sound the all-clear, although the downward trend has obviously slowed somewhat in the third quarter, and some cities have even been able to record slight increases…
Whilst the media have been reporting on a global fall in hotel room rates over the past few months of economic crisis, rates in the UK have actually remained surprisingly stable, even though they are still marginally down on the previous year. In Europe and the rest of the world as a whole, it is still too early to sound the all-clear, although the downward trend has obviously slowed somewhat in the third quarter, and some cities have even been able to record slight increases.
These are the findings of the hotel price index, calculated by the online hotel reservation service hotel.info for Q3 2009. The online hotel booking agent reached its conclusions after evaluating hotel rate requests for the third quarters of 2008 and 2009, as well as for Q2 2009. Warini Munshi, Managing Director of hotel.info hotel booking Ltd, explains the background, “We wanted to view the changes in rates during the third quarter in a direct comparison with the corresponding period last year – a period that had not yet been affected by the rate distortions triggered by the economic crisis. However, we also wanted to ascertain the rate trends for 2009, and to understand whether hotel rates had perhaps started to return to normal as the year progressed.”
The results are based on the average hotel rate per night and room for all categories of hotel and room.
Hotel room rates in the UK fell only slightly from the second to the third quarter of 2009 – down by just -1.01%. The year-on-year comparison revealed a decrease of -2.75%. This proves that UK hotel rates have been astonishingly stable compared with the rest of the world. In Q3 the average cost of spending the night in a UK hotel was £93.42. The rates of 2, 3 and 4 star hotel rooms recovered in July, August and September in comparison with the second quarter of 2009, but were still lower than they had been in Q3 2008. In contrast to 1 star hotels, which actually recorded a rise between Q3 2008 and Q3 2009 (+1.32%), 5 star hotel chains recorded a fall in rates over the same period of -4.97%.
The hotel room rate trend differed greatly across different UK cities. Whilst hotels especially in Liverpool and Birmingham recorded massive rate falls between Q2 and Q3 2009 (-17.99% and
-16.04% respectively), those in Glasgow and Edinburgh (+23.20% and +22.82% respectively) bucked the crisis-induced trend, presumably due to a strong summer tourist season.
With an average nightly rate of £113.47, London retains its position as having the UK’s most expensive hotels, followed by Edinburgh (£100.65). The average stay during Q3 2009 was 2.4 nights, which actually represented a slight year-on-year increase (Q3 2008: 2.38).
In most European countries hotel operators continued to suffer during the summer months from rate falls, which in some cases were significant. Cities that appear to have been particularly overvalued include Moscow (-17.04%), Helsinki (-16.41%) and Warsaw (-12.13%), all of which suffered again from Q2 to Q3 2009 following massive drops in the year-on-year comparison. Whilst the -13.42% drop in Madrid, the capital of crisis-wracked Spain, was unsurprising, the Catalan capital of Barcelona fared significantly better, with a fall of just -1.72%. Even though the UK appears have been even more badly hit by the economic crisis, this has not caused London rates to fall drastically. On the contrary, with average rates falling from 125.44 euros (£114.89) in Q3 2008 to 123.80 euros (£113.47) in Q3 2009, the UK capital recorded the smallest drop in rates of any European city. Only Berlin, Lisbon and Budapest were able to “keep up” with relatively moderate falls of between -3 and -6%. The hotels in these cities have also been those that have been the first to record a positive trend from the second to the third quarters of 2009.
Moscow (149.32 euros), Oslo (132.52 euros) and Copenhagen (127.66 euros) remained Europe’s most expensive cities for hotel rooms in the third quarter. As usual Zurich, Amsterdam, Stockholm, London and Helsinki were not far behind. Berlin (82.58 euros), Prague (62.94 euros), Budapest (77.91 euros) and Lisbon (80.18 euros) are revealed as having the best-priced hotels in Europe.
In a global analysis the fall in hotel room rates has slowed in the third quarter. While major cities such as Beijing (-38.83%), Dubai (-28.52)% and Bangkok (-24.36%) had to cope with the largest drops between Q3 2008 and Q3 2009, rates have fallen since Q2 2009 by “only” single-digit percentages, with the exception of the Australian metropolis of Sydney, whose hotels seem to be experiencing a delayed reaction to the global economic crisis and have recorded further massive falls between the second and third quarters of 2009 (-20.28%). In contrast, New York’s hotel room rates have risen markedly again since the beginning of July, increasing by +7.22%. The most stable city during the economic crisis in terms of hotel room rates has proven to be Brazil’s Rio de Janeiro, where hotel room rates actually climbed between Q3 2008 and Q3 2009 from 93.27 euros to 96.60 euros.
With an average room rate of 151.33 euros in Q3, New York has ousted Moscow (149.32 euros) from its position as the world’s most expensive place to get a room. Oslo (132.52 euros), Copenhagen (127.66 euros) and Zurich (124.67 euros) were also within the top five.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.