23rd March, 2009
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The Hotel Price Index
Review of 2008 – focus on Q4
Introduction
The Hotels.com Hotel Price Index (HPI) is a regular survey of hotel prices in major city destinations
across the world. The HPI is based on bookings made on Hotels.com, and prices shown are those actually paid by customers (rather than advertised rates), in the fourth quarter of 2008.
- The HPI tracks the real prices paid per room by Hotels.com customers around the world using
a weighted average based on the number of rooms sold in each of the markets that Hotels.com
operates in.
- Approximately 68,000 properties in more than 12,500 locations make up the sample set of hotels
from which prices are taken.
The international scale of Hotels.com (in terms of both customers and destinations) makes the
Hotel Price Index one of the most comprehensive benchmarks available, as it incorporates both chain and independent hotels, as well as options such as self-catering and bed and breakfast properties.
In Europe, approximately 25% of hotel rooms are part of a chain, the remainder being independent. The reverse is true of the US, where approximately 70% of hotel rooms booked are in chains.
In addition to the standard survey, the HPI includes occasional features on new or unusual booking and pricing trends.
In this issue
In the HPI report, we focus on two main sources of data:
The first section (chapter 1) shows the global Hotel Price Index for Q4 (October 1 – December 31, 2008).
The Index is compiled from all relevant transactions on Hotels.com, in local currency, weighted to
reflect the size of each market. By representing hotel price movements in an index, Hotels.com can
illustrate the actual price movements as felt by consumers without foreign exchange fluctuations distorting the picture.
The Index was started in 2004 at 100, and includes all bookings across all star ratings.
The report largely compares prices paid in Q4 2008 with prices paid in the same period in 2007,
thereby removing the effect of seasonality.
The second section (chapters 2-7) shows hotel prices across the world as paid by UK travellers
in Pounds Sterling. This shows the changes in real prices paid by consumers, reflecting both
movements in exchange rates and hotel pricing.
1. Global price changes
According to the Hotels.com Hotel Price Index, hotel prices around the world fell by 12% between
October and December 2008 when compared to the same period in 2007 – good news for travellers.
By the end of the year, global prices for hotel rooms had fallen to a level just 1% above those
in 2004.
This was driven by falls across every continent, although North America’s hotels experienced the
steepest falls during Q4 2008 (down 12% versus one year before). Prices in Europe were down
by a similar amount – by 10% on the same point a year before.
Dramatic price cuts across Europe
- Prices paid by travellers for hotel rooms in Europe fell by 10% between Q4 2007 and Q4 2008.
- Hoteliers in Europe cut prices dramatically in an effort to maintain occupancy during the final three
months of the year.
-
The Hotel Price Index for Europe fell to 102 in Q4 2008 – down from 113 in Q3 2008 and a stark
illustration of how sharply hoteliers cut prices at the end of the year.
North America prices continue to fall
- Prices paid by travellers for hotel rooms in North America (the US and Canada) fell 12% between
Q4 2007 and Q4 2008.
-
Prices for hotels in the Caribbean fell by 7% year-over-year during the same period and by
the same amount across Latin America.
-
The fall in prices for hotels across the region reflect the impact on US domestic demand and the
drop-off of demand from Europeans who have tightened their travel budgets.
Asian prices follow the trend
-
Prices in Asian hotels – which have held up better than those in the US and Europe – fell by
2% year-over-year in Q4 2008 when compared to the same period one year earlier.
-
The falls are the first quarterly drops in prices recorded in the Asian region since the Hotels.com
Hotel Price Index first began in January 2004.
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2. Top global city destinations
The sections that follow reflect the real Pound Sterling prices paid by travellers from the UK during Q4
2008 – compared to prices paid in Pound Sterling during the same period a year before.
Whilst prices in local currencies have fallen, weak Sterling meant that for UK travellers prices in many
places actually rose.
While UK travellers have not felt the impact of falling hotel prices around the world (because of the
weak Pound), they have felt the benefit in their home market – where prices for hotel rooms have fallen
steeply (see below and section 4) and there are some great rates to be enjoyed. There are also places
in Europe, where despite the strong Euro, prices are cheaper for Brits now than they were a year ago.
Overall most expensive destinations
-
Despite prices falling by 6% year-on-year, Moscow remained the world’s most expensive major city
for UK travellers as the average price for a room in the city was £207 during Q4 2008 (down from
£220 a year previously).
- Prices in New York fell for the first time since the Hotels.com HPI was started – down 1% year-onyear
in Q4 2008. This was due to the deepening economic crisis hitting travel habits in the domestic
market and forcing hoteliers to lower prices to maintain occupancy in response.
- Prices paid for rooms in Dubai rose by 12% year-on-year, making it the third most expensive city
worldwide for UK travellers, leapfrogging the US’ cultural capital.
- Geneva was the most expensive Western European city. Prices paid by UK travellers rose by a third
(34%) in the Swiss city. This is largely due to the Swiss Franc maintaining its strength against the
Pound and Geneva’s continuing importance as a business destination.
- Non-Euro destinations made up eight of the top-10 cities in which prices paid by UK travellers rose
fastest in Q4 2008.
- The steepest rises in prices paid by UK travellers was in Rio de Janeiro (up 63%).
- UK travellers spent substantially more in Q4 2008 than they did one year previously to stay in the
popular Swiss cities of Geneva (up 34%) and Zurich (up 20%).
- Reykjavik was the city in which prices paid by UK travellers fell furthest and fastest according
to the Hotels.com Hotel Price Index. The average price for a room in the Icelandic capital dropped
by 23% to just £62 in Q4 2008 as the economy faced significant challenges and hoteliers responded
accordingly to maintain their business.
- The average prices in Northern Irish capital Belfast also dropped steeply – down 17% between
Q4 2007 and Q4 2008 – making it the UK’s fastest-falling city price-wise. Prices for UK travellers
to Las Vegas fell by the same proportion as hoteliers have been slashing prices to ensure occupancy
levels remained high and as they make up for the loss of convention trade.
- Prices in London (paid by UK travellers in Pounds Sterling to the capital) also fell – down 12% yearon-
year – as the booming influx of European travellers to the capital failed to support the city’s hotel
prices and owners encouraged visits from domestic travellers, bringing prices down.
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3. European country destinations
Switzerland rises to become Europe’s most expensive country for UK travellers,
while UK sees the biggest fall.
- Prices paid by UK travellers to Switzerland rose by more than a fifth (22%) between Q4 2007
and Q4 2008 to make it the most expensive European destination for UK travellers. Prices averaged
at £120 for travellers booking in the country between October and December 2008.
- Other European country destinations to see substantial rises included Greece (where prices were
up by 15%) and Netherlands (where prices rose 14%).
- Other countries to see double-digit rises in the prices paid by UK travellers included Poland
(up 12%), France (up 11%) and Denmark (up 10%).
- At the other end of the scale, the UK saw the biggest falls. Prices paid were down
12% between Q4 2007 and Q4 2008 to just £93 on average. This fall reflects the generally
weakening sector and the fact that UK travellers did not have to contend with strong overseas
currencies when making their bookings.
- Switzerland – Europe’s most expensive country for UK travellers – also headed the price-rise table
with average room rates up 22% in Q4 2008 when compared with the same period in 2007.
- As has been observed, the UK was the country in which prices fell furthest, fastest of the major
European destinations – down 12% year-on-year in Q4 2008.
- Norway also saw the average prices paid by UK travellers in its hotels fall – down by almost a tenth
(9%) year-on-year.
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4. Focus on UK cities
Prices fell across UK hotels in Q4 2008 as hoteliers across the country looked to ensure that occupancy
levels were maximised. On average, prices in the UK paid by UK travellers for hotels across the country
were down 12% year-on-year.
However, the real story for UK hoteliers is shown when Hotels.com looked at what travellers from the
Eurozone nations and the US paid for rooms in the country. Prices paid by European and US travellers
were down by as much as 25% – showing their stronger currencies meant these visitors enjoyed
increased savings.
The only relief has been that US and European booking numbers to the UK have held up well as
travellers came in search of bargains with the weak pound.
UK hotel rates for UK travellers
- Bath, with its limited supply of luxury hotels, was the only city amongst those at the top of the
price league in which costs of hotel rooms rose – by 3% in Q4 2008 to £119. It remained the most
expensive city in the UK for domestic travellers. Bath remains one of the main tourist attractions
in the UK and its new waterfront and reopened spa have added to its appeal.
- However, Cardiff is the UK city that saw the highest price increase on last year, with a rise of 7%.
- Prices paid by UK travellers to London were down 12% year-on-year in Q4 2008 – to £111 per night
on average at the end of last year.
- Prices across Aberdeen, Edinburgh and Glasgow all fell in Q4 2008, when compared with Q4 2007.
- Leading the falls was Aberdeen, where prices dropped 13% to average £104 during the final three
months of the year.
- Prices in Edinburgh and Glasgow were down by a smaller degree – falling 3% and 4% respectively.
The prices paid to UK hotels by overseas travellers
Although the prices paid for UK hotels by travellers from across the country fell (by 12%), the
combined impact of the global downturn and the strong Euro’s impact on travel can be seen in the
average prices paid by travellers from Europe and the US for UK hotels.
- Hotels.com found that, on average, travellers from the Eurozone to the UK paid on average 24%
less for UK rooms in Q4 2008 than they did one year before. Leading the price falls were London
(down 24%), Manchester (down 24%) and Glasgow (down 23%).
- US travellers paid a similar proportion less for UK hotel rooms in Q4 2008 – average prices paid
by travellers from the US to the UK fell by 25% between Q4 2007 and Q4 2008.
- As a result of these price drops, Hotels.com has witnessed a dramatic rise in enquiries from Europe
and the US for hotels in the UK. In December 2008, French searches for hotels in London were up
by 77% compared to the year before.
- Searches from Eurozone travellers for London hotels were up by 49% in December 2008 compared
to December 2007.
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5. Prices paid at home and away
UK travellers pay the same when they travel within the country (£97) as they do when travelling
overseas, according to the Hotels.com Hotel Price Index.
Irish travellers are Europe’s biggest spenders when they leave their own country, according to the
research by Hotels.com, spending on average £112 per night on hotels. They are closely followed
by Italian and Spanish travellers (who spend £110 each per room, per night when abroad according
to the HPI).
At the other end of the scale, Finnish travellers are those who spend the least abroad according
to Hotels.com. The average Finn spends just £94 per night on their hotel rooms when overseas.
They are closely followed by German and Norwegian travellers (who each spend £95 per night).
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6. Beating the crunch: where to go
for £75 per night
Couples in search of luxury with £100 per night to spend on their hotel room would do well to head to
Prague, Berlin, Dublin or Madrid for weekend breaks.
If travelling further afield, the best value to be had is in Bangkok, Melbourne or Shanghai, according to
the Hotels.com Hotel Price Index. In each of these cities, £100 per night will easily buy a four or even
five star hotel room. Those with slightly less – around £75 per night for two, for example – should stick
to Bangkok, where their money will buy a four star room.
Once again, New York is where you get the least luxury for your money, averaging 1.6 stars for
£100 a night.
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7. Average room prices by
star rating
Hotels.com analysed the average prices paid for hotel rooms across different star ratings in the world’s
top cities.
The data demonstrates where UK travellers can find the best bargains. It also shows those cities where
it pays to shop around for the best deal: in some cases, travellers can end up paying more for a property
with a lower star rating, according to Hotels.com.
About Hotels.com
As part of the Expedia group which operates in all major markets with dedicated staff, Hotels.com
offers more than 99,000 quality hotels worldwide. If a customer can find the same deal for less on
a prepaid hotel, Hotels.com will match it. Hotels.com benefits from one of the largest hotel contracting
teams in the industry negotiating the best rates for its users, plus user-contributed reviews of its
properties. Travellers can book online or by contacting one of the multi-lingual call centres on
0871 200 0171.
The company currently operates 52 Hotels.com sites around the world including 31 sites in
24 languages across EMEA.
The European sites launched in the UK in 2001 and now attract several million unique users every
month. Thousands of people book bed nights through Hotels.com every day.
For further information
For more information/press enquiries or spokespeople, please contact:
Cordy Griffiths +44 (0)20 7019 2268 or a-cgriffiths@hotels.com
Alison Couper +44 (0)20 7019 2360 or acouper@hotels.com
or email us at press@hotels.co.uk
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