HRG Interim Hotel Survey August 2013

7/30/2019 HRG Interim Hotel Survey August 2013

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From Hogg Robinson Group

1A Hogg Robinson Group company

19 August 2013

HRG Interim Hotel Survey

Early signs of recovery but hotel rates fail to match market expectations

North America leading the way

Uncertainty continuing to impact MEWA

The latest interim Hotel Survey from Hogg Robinson Group (HRG), the award-winning international

corporate services company, shows evidence of early signs of recovery in hotel rates but not to thelevels expected by the market, in some cases four or five percentage points below what was expected.

Average room rates (ARR) have increased in [31/35] out of the top 50 cities. There is, however,

substantial disparity in performance across those cities. North America has been the strongest

performing region, with growth across all markets and in particular New York, Chicago and Toronto.

The Middle East and West Africa has continued to be affected by general uncertainty and increased

capacity.

Margaret Bowler, Director, Global Hotel Relations at HRG comments: The early sign of recovery in hotel prices

is encouraging, what is a surprise however is that in certain key cities the rates are not as high as the market

had expected in many cities this is attributed to new supply. On the whole occupancy is increasing faster

which, coupled with continued high demand, means we will be likely to see rates climbing in certain markets in

the second half of the year and beyond.

Key market trends noted this year include:

For the tenth year running Moscow remains the most expensive city for business travellers with an ARR of

263.07

Strong growth in the Oil and Gas industries, has helped Lagos retain its position as the second most

expensive city and also substantial increases in Houstons and Aberdeens ARR

There are four new additions to the top 50 cities list this year Toronto (26th), Athens (34th), Pittsburgh (46th)

and Chennai (48th)

Munich had the highest increase in ARR of 39.07%; however, this was driven by Bauma Fair, an

international triennial event that attracts visitor numbers, far exceeding the number of hotel rooms available

Within the UK market, only London, Aberdeen and Edinburgh recorded increases in ARR India is seeing a return to growth, especially in those cities which are also seeing growth in the outsourced

IT sector and SME business

Margaret Bowler continues: Once again we can see from the survey that regional trends are becoming less

relevant than they were four years ago, with significant variance across regions. Interestingly the survey also

shows the rise and rise of the megacity - 11 of the top 50 cities by room rate are also classified as megacities

and we are clearly beginning to see some marked differences between these and other cities that are popular

business destinations.

The megacities are all showing strong growth driven by a number of common features. Megacities benefit from

a combination of classic business travel and high conference and exhibition traffic. They also boast a good

market for tourism and have specialised centres for industry segments such as oil and gas for instance. With the

advantage of being able to cater for a variety of requirements, megacities can attract a more diverse range of

business.


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In comparison, other cities that are simply popular business destinations are subject to the general trend of the

market and the consequences of wider economic pressures that would influence fluctuations in demand for

example. Some of the city positions in the top 50 league table reflect capacity and the availability of room

space; limited new openings result in higher room rates (Moscow for example) whilst a number of new hotel

developments results in a competitive rate market (as seen in Abu Dhabi).

Clients need to be aware of the rise and rise of the megacity and the impact this growth pattern and dynamic

has on their hotel spend.

Whilst not uniform, the increase in average room rate highlights that travel remains an important part of winning

and conducting business. However, the below expectation increase in ARR is not likely to last and we expect to

see further ARR growth into the second half of the year, and an interesting 2014 RFP season.

For further information, please contact:

Sallyanne Heywood

Hogg Robinson Group

Tel: +44 (0) 1256 312 688

Email: [email protected]
mailto:[email protected]:[email protected]:[email protected]


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FULL RESULTS

Top 50 cities by ARR in GBP & Local Currency

RankingJan Jun

2013

APR GBP

Jan Jun

2012

APR GBP

GBP

Var

Jan Jun 2013

APR Local

Jan Jun 2012

APR Local

Local

Var

Exc Rate

%2012 2013

1 1 Moscow* 263.07 260.14 1.13% RUR 12,586.54 RUR 12,512.81 0.6% -0.5%

2 2 Lagos* 234.93 217.05 8.24% NGN 56,793.33 NGN 54,155.16 4.9% -3.1%

6 3 New York City* 222.52 203.86 9.16% USD 343.66 USD 321.44 6.9% -2.1%

5 4 Zurich 222.14 211.25 5.15% CHF 321.17 CHF 309.25 3.9% -1.2%

6 5 Geneva 216.14 216.59 -0.20% CHF 312.50 CHF 317.06 -1.4% -1.2%

7 6 Rio De Janeiro 209.86 202.65 3.56% BRL 657.68 BRL 594.51 10.6% 6.8%8 7 Paris* 207.69 195.82 6.06% EUR 244.25 EUR 237.96 2.6% -3.2%

9 8 Sydney 201.57 198.78 1.40% AUD 306.97 AUD 303.68 1.1% -0.3%

10 9 Stockholm 200.00 200.18 -0.09% SEK 2,006.10 SEK 2,160.32 -7.1% -7.1%

14 10 Washington 198.10 193.26 2.50% USD 305.94 USD 304.73 0.4% -2.1%

4 11 Hong Kong 194.65 196.30 -0.84% HKD 2,332.35 HKD 2,402.10 -2.9% -2.1%

11 12 San Francisco 190.71 180.25 5.80% USD 294.53 USD 284.22 3.6% -2.1%

13 13 Oslo 190.36 180.80 5.29% NOK 1,683.13 NOK 1,663.78 1.2% -3.9%

12 14 Tokyo* 179.88 177.29 1.46% JPY 26,513.94 JPY 22,281.89 19.0% 17.3%

15 15 Singapore 175.41 168.29 4.23% SGD 336.64 SGD 335.33 0.4% -3.7%

22 16 Rome 172.00 167.73 2.55% EUR 202.27 EUR 203.83 -0.8% -3.2%

16 17 Frankfurt 171.46 175.63 -2.37% EUR 201.64 EUR 213.42 -5.5% -3.2%

25 18 Dubai 168.43 162.02 3.96% AED 955.26 AED 938.20 1.8% -2.1%

23 19 Basel 167.19 161.30 3.65% CHF 241.72 CHF 236.13 2.4% -1.2%

19 20 Istanbul 165.50 165.24 0.16% TRL 462.80 TRL 469.23 -1.4% -1.5%

20 21 Sao Paulo* 165.14 161.81 2.06% BRL 517.53 BRL 474.70 9.0% 6.8%17 22 London* 164.63 163.53 0.68% GBP 164.63 GBP 163.53 0.7% 0.0%

27 23 Milan 160.60 156.11 2.88% EUR 188.87 EUR 189.71 -0.4% -3.2%

18 24 Copenhagen 160.19 170.14 -5.85% DKK 1,404.70 DKK 1,537.12 -8.6% -2.9%

21 25 Amsterdam 159.74 161.97 -1.38% EUR 187.85 EUR 196.83 -4.6% -3.2%

New 26 Toronto 153.87 130.95 17.50% CAD 241.25 CAD 207.66 16.2% -1.1%

24 27 Seoul* 151.84 149.90 1.29% KRW 257,505.48 KRW 269,939.76 -4.6% -5.8%

29 28 Brussels 150.44 152.54 -1.38% EUR 176.91 EUR 185.36 -4.6% -3.2%

30 29 Nairobi 148.28 144.56 2.57% KES 19,307.60 KES 18,887.09 2.2% -0.3%

33 30 Mumbai* 146.20 137.65 6.21% INR 12,395.12 INR 11,379.65 8.9% 2.6%

37 31 Houston 144.20 133.16 8.29% USD 222.71 USD 209.97 6.1% -2.1%

38 32 Miami 141.18 131.37 7.47% USD 218.04 USD 207.14 5.3% -2.1%

35 33 Beijing* 139.72 131.83 5.99% CNY 1,346.43 CNY 1,310.09 2.8% -3.0%

New 34 Athens 139.15 146.92 -5.29% EUR 163.64 EUR 178.54 -8.3% -3.2%

42 35 Barcelona 138.82 112.80 23.07% EUR 163.25 EUR 137.07 19.1% -3.2%

28 36 Abu Dhabi 138.49 146.81 -5.67% AED 785.45 AED 850.12 -7.6% -2.1%32 37 New Delhi* 137.77 137.17 0.44% INR 11,680.59 INR 11,339.78 3.0% 2.6%

39 38 Cape town 136.01 130.21 4.45% SAR 1,932.15 SAR 1,626.03 18.8% 13.8%

25 39 Munich 135.76 97.62 39.07% EUR 159.65 EUR 118.63 34.6% -3.2%

36 40 Shanghai 132.65 132.85 -0.15% CNY 1,278.28 CNY 1,320.27 -3.2% -3.0%

34 41 Johannesburg 131.50 142.44 -7.68% SAR 1,868.06 SAR 1,778.71 5.0% 13.8%

31 42 Dusseldorf 131.18 143.41 -8.53% EUR 154.26 EUR 174.27 -11.5% -3.2%

46 43 Aberdeen 130.01 110.23 17.94% GBP 130.01 GBP 110.23 17.9% 0.0%

40 44 Philadelphia 127.66 126.88 0.61% USD 197.15 USD 200.07 -1.5% -2.1%

47 45 Bangalore 121.42 114.50 6.04% INR 10,294.43 INR 9,465.98 8.8% 2.6%

New 46 Pittsburgh 121.36 99.91 21.47% USD 187.43 USD 157.54 19.0% -2.1%

45 47 Hamburg 119.02 118.91 0.10% EUR 139.97 EUR 144.49 -3.1% -3.2%

New 48 Chennai 118.95 129.90 -8.43% INR 10,085.04 INR 10,738.76 -6.1% 2.6%

41 49 Berlin 118.90 120.06 -0.97% EUR 139.82 EUR 145.90 -4.2% -3.2%

43 50 Madrid 118.54 119.66 -0.93% EUR 139.40 EUR 145.41 -4.1% -3.2%

*Mega cities


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Top 5 highest rate increase local ARR

Jan Jun

2013

APR GBP

Jan Jun

2012

APR GBP

GBP

Var

Jan Jun 2013

APR Local

Jan Jun 2012

APR Local

Local

Var

Exc Rate

%

Munich 135.76 97.62 39.07% EUR 159.65 EUR 118.63 34.6% -3.2%

Barcelona 138.82 112.80 23.07% EUR 163.25 EUR 137.07 19.1% -3.2%

Tokyo 179.88 177.29 1.46% JPY 26,513.94 JPY 22,281.89 19.0% 17.3%

Pittsburgh 121.36 99.91 21.47% USD 187.43 USD 157.54 19.0% -2.1%

Cape Town 136.01 130.21 4.45% SAR 1,932.15 SAR 1,626.03 18.8% 13.8%

Barcelona, Cape Town and Munich have benefitted from good convention business during the period

Tokyo continues to do well. The majority of the growth is due to a shift in the exchange rate, the movement of

the pound against the yen has been favourable to UK based business travellers

Pittsburgh has seen an upsurge in corporate demand from the health, research and Steel sectors and a

significant lack of hotel rooms to meet this demand helping to push up ARR

Top 5 highest rate decreases local ARR

Jan Jun

2013

APR GBP

Jan Jun

2012

APR GBP

GBP

Var

Jan Jun 2013

APR Local

Jan Jun 2012

APR Local

Local

Var

Exc Rate

%

Dusseldorf 131.18 143.41 -8.53% EUR 154.26 EUR 174.27 -11.5% -3.2%

Stockholm 200.00 200.18 -0.09% SEK 2,006.10 SEK 2,160.32 -7.1% -7.1%

Copenhagen 160.19 170.14 -5.85% DKK 1,404.70 DKK 1,537.12 -8.6% -2.9%

Athens 139.15 146.92 -5.29% EUR 163.64 EUR 178.54 -8.3% -3.2%

Abu Dhabi 138.49 146.81 -5.67% AED 785.45 AED 850.12 -7.6% -2.1%

Rates fell in Dusseldorf as the city did not benefit from a good convention season. However large shows are

booked into the city in 2014, which are sure to drive demand

Athens is still struggling with both the sovereign debt crisis and over supply. ARR continues to fall as a

Stockholm and Abu Dhabi were affected by backward moves in exchange rates causing drops in room rates

in local currency of -7.1% and -2.18% respectively

Copenhagen was not helped by an increase in bed stock and an exchange rate pulling the ARR down


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GBP ARR by global regions

Europe as a whole sees a slight drop in ARR of 3.34 this was driven mainly by the weaker performance in

the UK regions excluding London and some individual key cities such as Athens and Dusseldorf

MEWA continues to be effected by the political and socio-economic instability together with the civil war in

Syria however growth in the Gulf pushes a slight regional wide ARR growth from 134.16 to 137.52

Asia sees modest growth overall which hides some large swings each way in key cities showing ARR moving

from 165.24 to 166.89

The Americas, as previously mentioned, see good ARR growth driven primarily by the corporate market

continuing to strengthen in the USA and some key Latin cities the ARR moves from 138.40 to 148.65.

Africa sees a slight fall in ARR but key cities such as Lagos continue to do well, overall the ARR moved

backwards from 136.65 to 133.39

0.00

20.0040.00

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80.00

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140.00

160.00

180.00

2013 ARR Jan - Jun

2012 ARR Jan - Jun


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Regional Snapshots

North America

CityARR GBP

12ARR GBP

13ARR Local

12 ARR Local 13 Local Var GBP VarExc Rate

Var

New York City 203.86 222.52 USD 321.45 USD 343.66 7% 9% -2%

Washington DC 193.26 198.10 USD 304.73 USD 305.95 0% 3% -2%

Houston 133.16 144.20 USD 209.97 USD 222.70 6% 8% -2%

Boston 172.66 177.91 USD 272.25 USD 274.76 1% 3% -2%

Chicago 138.42 155.86 USD 218.26 USD 240.71 10% 13% -2%

San Francisco 180.25 190.71 USD 284.22 USD 294.53 4% 6% -2%

Philadelphia 126.88 127.66 USD 200.06 USD 197.16 -1% 1% -2%

Los Angeles 166.90 168.52 USD 263.17 USD 260.26 -1% 1% -2%

Vancouver 118.25 122.08 CAD 187.52 CAD 191.41 2% 3% -1%

Toronto 130.95 153.87 CAD 207.66 CAD 241.25 16% 18% -1%

Ottawa 107.63 119.03 CAD 170.68 CAD 186.63 9% 11% -1%

Montreal 101.53 102.11 CAD 161.01 CAD 160.10 -1% 1% -1%

North America in general is seeing a very positive period as the pace of the global recovery takes hold here

more so than in other regions

Chicago has seen high growth in ARR driven by the rebound of the convention market coupled with a market

that has not seen any new significant hotel product for some time now. The corporate sector has also picked

up compared to 2012 as major industries in the manufacturing and financial sectors invest more and recruit

more compared to 2011/12 New York continues its ARR growth buoyed by higher corporate demand from the financial and banking

sectors and despite additional bed stock coming on line

Toronto saw two key conventions driving up demand during this period and also helping keep ARR growth

high is that fact that no new hotel openings in 2013

Houston has seen a growth in ARR of 8% in GBP and 6% in USD, this has been driven by the booming oil

and energy sectors coupled with a market that has seen very little new product come online recently

Europe

CityARR GBP

12ARR GBP

13ARR Local

12ARR Local

13 Local Var GBP VarExc Rate

Var

Moscow 260.14 263.07 RUR 12,512.86 RUR 12,586.32 1% 1% -1%

Hamburg 118.91 119.02 EUR 144.50 EUR 139.97 -3% 0% -3%

Geneva 216.59 216.14 CHF 317.07 CHF 312.50 -1% 0% -1%

Barcelona 112.80 138.82 EUR 137.07 EUR 163.25 19% 23% -3%

Frankfurt 175.63 171.46 EUR 213.43 EUR 201.64 -6% -2% -3%

Paris 195.82 207.69 EUR 237.96 EUR 244.24 3% 6% -3%

Brussels 152.78 155.47 EUR 185.66 EUR 182.83 -2% 2% -3%

Dublin 98.85 99.77 EUR 120.12 EUR 117.33 -2% 1% -3%

Vienna 131.02 129.95 EUR 159.22 EUR 152.82 -4% -1% -3%

Athens 146.92 139.15 EUR 178.54 EUR 163.64 -8% -5% -3%

Madrid 119.66 118.54 EUR 145.41 EUR 139.40 -4% -1% -3%

Berlin 120.06 118.90 EUR 145.90 EUR 139.83 -4% -1% -3%


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Barcelona saw a very busy convention season in Q1 & Q2

Eurozone countries saw a -3% movement in exchange rate across the period, and so apart from a few cities

most saw a modest fall in GBP exaggerated by the movement in exchange rate.

Athens continues to suffer the effects of the ongoing sovereign debt crisis in Greece and an oversupply of

hotels. Hotels in the upper 4 and 5 star market seem to be dropping rate as demand falls away.

Paris saw a strong convention season Q1/Q2 coupled with high corporate demand especially from emerging

markets driving the ARR increase.

Asia Pacific

CityARR GBP

12ARR GBP

13ARR Local

12ARR Local


Var

Hong Kong 196.30 194.65 HKD 2,402.04 HKD 2,332.39 -3% -1% -2%

Singapore 168.29 175.41 SGD 335.33 SGD 336.65 0% 4% -4%

Tokyo 177.29 179.88 JPY 22,281.81 JPY 26,514.31 19% 1% 17%

New Delhi 137.17 137.77 INR 11,339.76 INR 11,680.68 3% 0% 3%

Mumbai 137.65 146.20 INR 11,379.44 INR 12,395.41 9% 6% 3%

Bangalore 114.50 121.42 INR 9,465.65 INR 10,294.46 9% 6% 3%

Hyderabad 88.22 88.76 INR 7,293.09 INR 7,525.42 3% 1% 3%

Beijing 131.83 139.72 CNY 1,310.13 CNY 1,346.45 3% 6% -3%

Shanghai 132.85 132.65 CNY 1,320.26 CNY 1,278.32 -3% 0% -3%

Sydney 198.78 201.57 AUD 303.68 AUD 306.97 1% 1% 0%

Tokyo continues to do well, however that majority of the growth seen locally had been driven by a large shift

in the exchange rate with GBP only moving a modest 1.4%. The movement of the pound against the Yen has

been favourable to UK based business travellers

Singapore saw a 4% growth in GBP but this was wiped out by exchange rate movements and so locally the

city remains flat in terms of ARR

India is showing signs of ARR picking up, although in many cases this was helped by the favourable

exchange rate. However real growth was seen in Mumbai and Bangalore driven by a lack of new openings in

Bangalore, and lots of new demand from the outsourced IT sector and in Mumbai by growth in the SME

sector using best available rates. Indian inflation is also running at approximately 7% per annum with hotels

regularly seeing 3-5% increases in negotiated rates (Indian CPI)


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MEWA

CityARR GBP

12ARR GBP

13ARR Local

12ARR Local


Var

Dubai 162.02 168.43 AED 938.18 AED 955.23 2% 4% -2%

Abu Dhabi 146.81 138.49 AED 850.10 AED 785.43 -8% -6% -2%

Manama 159.71 162.19 BHD 94.21 BHD 93.68 -1% 2% -2%

Istanbul 165.24 165.50 TRL 469.22 TRL 462.79 -1% 0% -2%

Cairo 115.69 102.96 EGP 1,095.77 EGP 1,076.82 -2% -11% 10%

Doha 172.08 174.11 QAR 984.83 QAR 977.04 -1% 1% -2%

Cairo continues to feel the affects of the recent uprisings seeing demand drop away and as a result hotelsfighting for less share and driving down ARR. A large fall in GBP was helped locally by changes in the

exchange rate.

Istanbul saw over 1150 new rooms open in the last 12 months so it is no surprise to see the city seeing more

or less flat ARR compared year on year. The uncertainty in this area of the world being close to the conflict in

Syria is also having a dampening effect.

Dubai continues to grow ARR with corporate business returning and supply still catching up with demand

after several years of stagnation.

The increased supply in the mid market in Abu Dhabi is still effecting ARR with a 6% fall in GBP being

compounded by a backwards move in exchange rate resulting in a 8% fall locally.

UK

CityARR GBP

12ARR GBP

13 GBP Var

London 163.53 164.63 1%

Aberdeen 110.23 130.01 18%

Heathrow 109.25 103.98 -5%

Manchester 93.13 90.57 -3%

Newcastle 92.24 88.17 -4%

Edinburgh 89.80 90.47 1%

Glasgow 84.93 84.35 -1%

Belfast 87.83 86.43 -2%

Liverpool 87.45 86.30 -1%

Cardiff 77.92 77.67 0%

Aberdeen saw the largest growth in ARR driven by high demand (from a booming oil and energy sector) and

limited new supply in the city, however as new properties come on line later this year and into next we are

confident that rates will continue to be high

The rest of the UK was either flat or showing modest drops in ARR reflecting the fact that Q1 saw corporate

demand flat line in the regions and events that took place in 2012 like the 100th anniversary of the Titanic in

Belfast and new car production in Liverpool did not repeat

London saw a modest growth of 1% in ARR which considering all the new bedroom stock that has opening in

the last 12 months shows that corporate demand remains strong in the capital. The city saw the impact of

new openings with ARR moving backwards


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HRG Interim Hotel Survey August 2013

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