Business Travel News - March 29, 2010 - (Page 4)

U.S. Corp. Travel Per Diems Hold The Line BY MICHAEL B. BAKER & JAY BOEHMER H otels in particular lost pricing power compared with the previous year, while food costs stayed steady and car rental companies even gained a little pricing power, according to Business Travel News’ annual tabulation of daily costs for hotels, car rental and three daily meals in 100 U.S. business travel destinations. Similar to 2009, hotels made up about 43 percent of the average daily cost in the 2010 Corporate Travel Index, while car rental overtook dining costs as a slightly larger piece of the per diem pie. Overall costs were slightly up compared with the 2009 Corporate Travel Index, but these largely are the result of a change in methodology (see sidebar below). New York, Washington, D.C., Boston and Detroit are the most expensive major U.S. cities for business travel. Outlying areas of New York, including White Plains, N.Y and Newark, N.J., . also became comparatively more expensive than other cities, while several destinations with large leisure and group contingencies fell significantly. Las Vegas, which became a politically charged destination following criticism by elected officials as an example of corporate excess, was the 30th most expensive city overall last year, but fell to 45th. Honolulu also dropped out of the top 10, falling from ninth to 20th. With hotels facing unprecedented average daily rate and revenue declines in 2009, buyers have lowered corporate negotiated hotel rates in top cities, though not without a grueling effort that required constant renegotiations throughout the year to keep pace with market conditions. New York remained the most expensive city for hotels, though its premium over other cities eroded significantly. The city’s total average hotel rate, nearly 30 percent higher than the second most expensive city, Washington, D.C., in 2009, was less than 10 percent higher than Washington’s rate this year. New York University Tisch Center associate professor Bjorn Hanson said that while New York occupancies remained much higher than the national average, rates deteriorated significantly in the upper tiers. The city’s average daily rate in the luxury tier dropped a staggering 40 percent in 2009 METHODOLOGICAL CHANGES The 2010 Corporate Travel Index for the first time offers actual average 2009 hotel rates paid by BCD Travel corporate clients, provided to Business Travel News by the travel management company’s Advito consulting arm. The charted hotel costs on pages 10 and 11 include breakdowns of average upper upscale, upscale and midprice hotel rates in addition to an overall average rate. However, the overall average incorporates luxury and economy tier rates and is not an average of the rates of the three listed tiers. Business Travel News added hotel tax and fee information to the average hotel rate based on original research into sales and occupancy taxes and surcharge through each city’s convention and visitors bureau, chamber of commerce or other public data. Meanwhile, average car rental costs are based on information listed in the Sabre global distribution system on the first three Tuesdays and Wednesdays in November 2009, as provided by Advito. ■ compared with 2008, he said. A change in index methodology skews yearover-year comparisons, but Advito vice president Bob Brindley said the firm’s data show New York’s overall rates dropped 25 percent compared with the previous year. Other cities with significant decreases include Miami, down 17 percent, and Las Vegas, down 21 percent. Washington, meanwhile, was among the most stable of the most expensive cities, Brindley said. Presidential Inaugural activities gave it a boost in January, when other cities’ hotels were facing their most difficult times, and government travel kept its levels steadier than corporate travel. The overall 10 most expensive cities remained largely unchanged this year, except for Hartford, Conn., which had no midprice hotel rates reported, replacing San Diego, which fell to 18th. The order changed slightly, with San Francisco and White Plains, N.Y., outpacing Chicago and Baltimore. Even with overall economic conditions improving, hotels face an additional influx of supply this year above the rate of demand, particularly in the upper upscale and luxury tiers, Hanson said. Consultants do not expect a repeat of last year’s constant renegotiations, however. “Hotels are definitely going to rebound, but probably not as fast as the hoteliers will like, so 2010 will be status quo,” Carlson Wagonlit Travel Solutions Group global project manager of hotel consulting Monica Eiden said. “Hotels will maintain where their rates are this year, and it will be tough for them to negotiate and implement increases moving into 2011.” Hanson indicated some renegotiations are likely, but Brindley said they would mostly be on a small scale and limited to select markets that are adding a lot of capacity. “Clients will be looking for a few adjustments or possibly trying to lock in rates for 2011,” he said. “From a pendulum perspective, by the end of 2010, booked rates will start trending up, though negotiated rates will still be locked in at a big decline. The best-case scenario for hotel rates is to reach pre-recession levels by 2013, Hanson said, while the worst-case scenario has Continued on page 9 4 CORPORATE TRAVEL INDEX 2010 www.BTNonline.com March 29, 2010 http://www.BTNonline.com

Table of Contents for the Digital Edition of Business Travel News - March 29, 2010

Business Travel News - March 29, 2010
Table of Contents
Domestic Corporate Travel Index
Per Diems In 100 U.S. Cities
Alphabetical List Of U.S. Cities
Hotel Costs In 100 U.S. Cities
Food Costs In 100 U.S. Cities
Car Rental Costs In 100 U.S. Cities
City Profiles - Beijing
City Profiles - Hong Kong
International Corporate Travel Index
International Methodology
Per Diems In 100 International Cities
Alphabetical List Of International Cities
Hotel Costs In 100 International Cities
Food Costs In 100 International Cities

Business Travel News - March 29, 2010