15th September 2009 Acrobat (pdf, 1180 KB)
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 first six months of 2009. Now in its fourth year, the HPI is respected as the definitive report on hotel prices paid around the world and increasingly used a reference tool by media, analysts, tourism bodies and academics.
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, in which approximately 70% of hotel rooms booked are in chain properties. In addition to the standard survey, the HPI includes occasional features on new or unusual booking and pricing trends.
Not since 2001, in the aftermath of 9/11, has there been such a collapse – surely the word is justified – in global hotel prices. The dampening effect of falling consumer demand has been compounded by sharply increased hotel capacity. In the first half of 2009 an ever larger number of hotel rooms chased a dwindling stream of customers, and this ‘double whammy’ lowered prices by 17% globally.
As demand fell, hoteliers closed floors and cut back both services and prices, creating a market with a distinctly promotional character that is likely to endure for some time. The HPI, based on the actual prices that consumers paid for their rooms, fully captures this new reality and is designed to allow the reader to sift the figures that are particularly relevant to them.
Three trends seem significant in the data. Firstly, travellers do take local pricing and the strength of their own currency into account when deciding where to go. We can see this in the increase in prices paid by UK travellers to destinations outside the Eurozone. The increase in demand to travel where the Pound has retained its strength has in turn pushed rates up. US travellers have looked to domestic destinations more as the cost of overseas travel has been increased by other currencies’ gains in value against the Dollar.
Secondly, some traditionally expensive destinations have become more accessible. London has dropped out of the top ten table of most expensive destinations for continental Europeans, and New York no longer heads the price leagues. Dubai was one of the world’s most expensive places to stay until the second quarter, but prices have fallen at double digit rates since.
Lastly, corporate travel has been hit hardest, and has produced marked price cuts in business focused destinations as hoteliers struggle to attract some level of demand. Our city focus sections in Chapter 3 expand on this subject.
Stepping back, it is not just hotel prices that have reduced, but so too have the prices of most primary travel goods (including car rental and air tickets). Yet the difficulties that the travel industry is experiencing are mirrored – but oppositely – as opportunities for consumers. In these times Hotels.com is working harder than ever to surface those opportunities for hoteliers and consumers alike. Consumers have not seen prices this low since 2003 leading many commentators to propose that real value has returned to the hotel market. We think so too. It is time to travel again.
David Roche
September 2009
The first section (chapter 1) shows the global Hotel Price Index up to and including Q2 2009.
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 experienced 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 the first six months of 2009 with prices paid in the same period the year before, thereby removing the effect of seasonality.
The second section (chapters 2-8) shows hotel prices across the world as paid by European travellers in Euros. This shows the changes in real prices paid by consumers, reflecting both movements in exchange rates and hotel pricing. The prices shown are average prices paid by travellers between January and June 2009.
According to the Hotels.com Hotel Price Index, hotel prices around the world fell by 17% in the first six months of 2009, when compared to the same period in 2008 – great news for travellers.
With the exception of the Caribbean, every major region around the world experienced the sharpest price-falls since the Hotels.com Hotel Price Index began in January 2004.
In Europe, the US and Latin America, hotel prices in Spring/Summer 2009 had fallen to levels well below those in 2004, according to the Hotels.com Hotel Price Index, meaning hotel room prices were at their lowest level for five years.
Latin American hotels saw the steepest price fall year-on-year (down 18%), while North American hoteliers cut prices by 17%. The average price for a hotel room in a European hotel was 16% lower than it had been a year before.
This section (and those that follow) reflects the real Euro (€) prices paid by travellers from Eurozone countries during January and June 2009 – compared to prices paid in Euros (€) during the same period a year before.
Prices paid in the first six months of 2009 by travellers from the Eurozone rose in just three major global city destinations when compared to the same period in 2008. This was a result of the global slowdown forcing hoteliers worldwide to cut their prices to stimulate occupancy.
It was also due to the strength of the Euro which meant European travellers have not enjoyed such low prices for some years in many destinations.
Average price falls were particularly keenly felt in Moscow, which has lost its mantle as the world’s most expensive city. Prices there fell 39% between the first half of 2008 and the same period this year. As a result, the Russian capital dropped to fourth place in the league table of most expensive destinations.
Traditionally regarded as one of the most expensive cities in the world, London has long been seen as an aspirational destination. But, the changes in the global economic landscape and fluctuations in foreign exchange rates have made London a much more accessible destination in 2009.
As the 2012 Olympics to be hosted in London approach, hotel room supply in the city has steadily been increasing. In 2008 more than 3,000 new rooms were added whilst in 2009 an additional 3,400 are forecast.
As hotel prices continue to fall and hotels in the city usher in special offers and deals, consumers are starting to recognise how far their holiday budget will go. One of the most pronounced changes experienced by London’s hotel market has been that visitors can upgrade the star rating of hotel or the room category for little additional money.
The visitor profile in the city has also undergone a number of changes. Whilst visitor numbers in general have dropped by just over 9% compared to last year, the mix of where those visitors are coming from has also changed. The strength of the Euro against the Pound has seen visitors from Europe remain resilient, down just over 3% year-on-year, whilst visitors from the US and Canada, once a strong market, fell steeply at around 20% year-on-year. One market that has grown into London is from the UAE where numbers have risen just over 6% year-on-year.
In the first half of 2009, New York overtook Las Vegas as the US city experiencing the fastest growth in hotel rooms. Current figures show that a total of 38 new properties will open in 2009, increasing the number of hotel rooms in the city by nearly 8,000.
However, occupancy rates in the first half of 2009 were down by 5% compared to the same period a year before, mainly fuelled by a downturn in business travel. The leisure market to the city proved more resilient.
Visitor numbers from the UK were down by some 26%, as Sterling continued to perform weakly against the Dollar, while visitor numbers from France, Germany, Italy and Spain held up well. The trend seemed to be towards last minute bookings from Europe though as travellers shopped around for a late deal.
The drop in European visitors opened up more rooms for domestic travellers to New York and made the city (a mere 8-hour drive away for a quarter of the entire US population) more affordable. Visitors from countries whose currency is pegged to the Dollar also increased, with Brazil showing particular strength.
It was the luxury end of the New York market (3 to 5-star hotels) that saw the most pronounced changes: prices fell furthest while booking numbers increased the most. Savvy travellers realised their money could now buy a higher category hotel, plus that lower rates would allow them to stay longer.
Hoteliers have also had to compete harder for visitors as central Manhattan hotels lower their rates to levels usually found in suburbs such as Brooklyn and Queens.
The number of flights into New York has been cut by around 3 to 5% but, luckily for the consumer, flight prices have not risen to reflect this. In fact, flight prices to New York are currently the level they were back in 2007.
These decreases in flight and hotels rates plus the abundance of hotel rooms and competition between properties all add up to paint a rosy picture for the traveller.
Glitz, glamour, gambling and a guaranteed good time, Las Vegas is the ultimate indulgence destination for those that want to get away from it all. But under the baize of the gambling tables a quiet revolution is taking place, one that puts the betting chip firmly back in the hands of the consumer.
The hotel landscape of America’s most glamorous city has changed since the global recession dawned in 2008. Traditionally one of the largest markets for Las Vegas has been the convention and meeting trade, but in 2008 the number of events held in the city dropped by almost 6% leading to a steep fall in the prices of average hotel room rates as hoteliers competed to try to keep their occupancy levels constant. So far in 2009 the convention market is showing little sign of recovery with trade in this sector down more than 22% to date year-on-year.
A decline in visitor numbers is also having an effect on the average room night in the city. To date in 2009 the total visitor numbers, incorporating the leisure, business and convention markets, are sitting almost 7% lower than the same period in 2008.
Whilst these factors combined may paint a rather gloomy picture for business in Las Vegas, it places the consumer in a very strong position. Travellers can now snap up rooms on the world famous strip for a fraction of the prices seen in recent years and as hotels pull out all the stops to attract guests an unprecedented amount of promotional offers are available.
Room night prices in the city have reached a plateau and as hotels look to protect their margins, Vegas has seen a rise in the number of hotels across the spectrum of star ratings bring in a number of added value offers designed to tempt travellers. These range from free nights for returning visitors and casino credits to complementary spa treatments and food and drink vouchers.
As travellers benefit from great prices and added value offers, they are also experiencing a greater choice in properties as hotel construction in the city remains at a high level. Second only to New York, the number of hotel rooms in Vegas rose by over 7,000 in 2008 with a further 5,000 forecasted by the end of 2009.
While both lie in the UAE, the changes in the visitor landscape of Abu Dhabi and Dubai couldn’t be more different. The effects of the global economic downturn were felt later in the Middle East than in the rest of the world with the slowdown not being felt until Q4 2008.
Being mainly a business destination, Abu Dhabi kept its early 2009 hotel market relatively buoyant maintaining high numbers of business travellers and MICE trade. This, coupled with a low inventory of rooms across the destination, meant that average room night rates stayed high. By Q2 2009 however, room rates started dropping in Abu Dhabi as the economic downturn affected the number of business travellers visiting the Emirates.
Just 119kms away, the picture in Dubai was very different. Hotel prices in Dubai fell sharply in Q1 2009 as the Emirate became something of a victim of its own success. The global downturn coupled with an over-supply of hotel rooms, meant hotel rates dropped dramatically. The number of hotel rooms in the city had grown exponentially increasing by 16% throughout 2008 with 2009 looking set to keep pace. Well-known hoteliers such as Sofitel, Kempinski, Ibis and Mövenpick all have openings planned for 2009.
In Q2 2009, the sharp price drops in Dubai begin to soften slightly as hoteliers adjusted to the rapidly changing economic situation. However, with more and more promotions from hoteliers to try to attract customers, there has never been a better time for travellers to stay in some of the world’s top properties for a great price.
Visitors to Dubai are also changing, as fewer Britons and Russians head to those shores, and more visitors from the US and Italy take their place instead.
While Switzerland became the most expensive major European country for Eurozone travellers, the real story behind the average prices paid for hotel rooms in the major nations is the falls experienced across the board – by around a quarter in seven of the countries Hotels.com analysed.
At the other end of the scale, the Eastern European countries were the lowest-priced in Europe, having seen prices drop year-on-year by over one fifth. The cheapest European countries were the Czech Republic and Hungary (€ 71 per night on average) and Poland (€ 73 per night on average).
In the first half of 2009, Norwegian and Irish travellers together held the mantle of “Europe’s biggest spenders” when travelling overseas, according to the research by Hotels.com, spending on average € 122 per night on hotels.
Norwegian travellers are the biggest spenders within their home nation, parting with € 142 per night for hotel rooms. In second place, Danes spend € 129 per night while staying away within their own borders while, with an average nightly spend of € 119 at home, the Swedish travellers complete a Scandinavian top-three.
It’s a different story for the Irish when staying at home, with an average price paid per room of € 94, or sixth position when compared to spend at home by their European counterparts.
At the other end of the scale, Finnish travellers are those who spend the least abroad according to Hotels.com. The average Finnish traveller spends just € 104 per night on their hotel rooms when overseas. They are closely followed by German travellers (who each spend € 107 per night).
Couples in search of luxury with as little as € 150 per night to spend on their hotel rooms are now spoilt for choice when it comes to finding some luxury for less.
From Bali to Berlin, from Buenos Aires to Budapest and from Beijing to Barcelona, travellers can get a night in 5-star luxury for € 150 per night or less in almost 40 of the world’s major capital cities according to the Hotels.com Hotel Price Index.
For those with only slightly less to spend – € 100 per night – Hotels.com’s top picks for the 5-star high life at lower prices include Bali, Pisa or Warsaw.
Hotels.com analysed the average prices paid for hotel rooms across different star ratings in the world’s top cities.
The data demonstrates where travellers can find the best bargains. It also shows those cities where shopping around for the best deal can yield dividends: in some cases, travellers can trade up a starrating for just a few Euros.
As part of the Expedia group which operates in all major markets, Hotels.com offers more than 100,000 quality hotels, B&Bs and serviced apartments 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 customers, plus there are 1.3m reviews from users who have actually stayed in the hotels to ensure customers make an informed choice when booking. Hotels.com won the Gold Award for best hotel booking site in Webuser magazine in February 2009. Travellers can book online or by contacting one of the multilingual 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.
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