Strong Business Travel Squeezing Global Hotel Room

Media Release 13 December 2005

Strong Business Travel Squeezing Global Hotel Room Supply

A healthy global economy is driving strong demand for hotel rooms in most regions of the world, with business travellers seemingly undeterred by terrorism, bird flu and high oil prices, according to global corporate travel and expense management specialist FCm Travel Solutions.

But a study of global hotel trends points to tougher times ahead for travellers, with market growth generally outstripping the supply of new hotel rooms.

FCm Travel Solutions general manager Christian Casbolt said the corporate travel specialists was finalising its room rate negotiations for 2006 and had been involved in some tough negotiations to secure the best deals for its clients. FCm Travel Solutions deals with more than 30,000 hotels globally.

“We’ve seen the high demand create a strong position for hotels,” said Mr Casbolt.

According to FCm, Australian and New Zealand hotels were enjoying strong demand, with an average of 13 per cent RevPAR (revenue per available room) growth.

Double digit RevPAR growth was experienced across Asia, India and the Middle East, with demand outstripping supply during peak periods in key cities.

“The region that has the greatest impact on our business travellers, Asia, has achieved a RevPAR growth of around 15 per cent, with Singapore leading the way at 33.4 per cent, Bangkok up by 23.9 per cent and Hong Kong 6.3 per cent,” Mr Casbolt said.

Expansion of hotel capacity in China is one of the main hotspots, remaining a key focus for hoteliers ahead of the 2008 Olympics in Beijing. Beijing is set to match Shanghai occupancies and rates by 2007.

“The economic recovery in Japan is also being felt across the region,” Mr Casbolt said.

Annualised occupancy levels in India were at 75 per cent, hitting 90 per cent from October to March, with a major shortfall in key cities such as Bangalore.

“An interesting trend in India is the increase in long stay accommodation, at 25 per cent of all stays. This is an indication of the increased involvement of foreign companies in the Indian economy, and project-driven accommodation requirements,” Mr Casbolt said.

The trend in Europe and the Americas was not as pronounced, but it still went up.

RevPAR growth in the USA and Canada was up 8.4 per cent, with occupancy levels of 85 per cent or more in major commercial cities and 67 per cent across the board. However room supply increased by only 2.2 per cent, indicating no relief in sight to the cost pressures.

In Europe average occupancies were 78 per cent or more and RevPAR generally grew by 2.9 per cent. In the UK the RevPAR growth was 5.8 per cent. Room supply increased by three per cent, half of the growth in demand.

Mr Casbolt said business travellers were seeing the effect of low cost carriers and more liberalised travel generally, although FCm had enough negiotating power to be able to cope with some of the excesses of high hotel room demand.

“Strong trade and convention events are driving occupancies and rates, and travellers seem to have shrugged off political and health fears and are just getting on with business, because there’s plenty of business to get on with.”

ENDS

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