Sunday, September 18, 2011

Political turmoil and natural disasters lead to volatility in hotel prices globally: Hotels.com

According to the latest Hotels.com, Hotel Price Index (HPI), hotel prices across the world have experienced pronounced volatility, as a result of political turmoil and natural disasters during the first half of 2011. The average price of a room around the world rose by just three per cent but this marked some steep rises and falls in regions affected by the historic events in the first six months of the year.

Other factors such as currency strength and supply of rooms also impacted average room prices across the world, although the report shows that overall these were just six per cent higher than when the HPI was launched in 2004, representing outstanding value for travellers. Prices fell six per cent in Asia Pacific year-on-year but rose in all other areas: four per cent in North America, two per cent in Europe and Latin America and one per cent in the Caribbean.

The uprisings which occurred in North Africa and the Middle East triggered substantial reductions in hotel prices across the region as tourists and business travellers stayed away not only from countries directly hit by the civil unrest but also from those, which escaped political protest. However, the fall in consumer confidence was good news for destinations in southern Europe as travellers returned to more traditional havens. The rising demand pushed up prices in some Spanish sunshine destinations and the overall HPI for Europe rose two per cent compared with the first half of last year. Ireland was also helped by the high-profile visits of Queen Elizabeth II and President Obama, which triggered a slight market recovery in hotel prices by attracting visitors and boosting demand.

Average prices for hotel rooms across Asia Pacific fell by six per cent over the period. The Japanese earthquake, tsunami and nuclear crisis at Fukushima led to reduced occupancy and falling demand in the country and also had a knock-on effect in other parts of the region as the Japanese chose to stay close to home. However, despite the downward price pressures, there were also some marked rises in the region, especially in strong economies such as Australia where corporate travel continued strongly and the Australian Dollar remained high.

New Delhi bagged the top slot in the list of most popular places for domestic travellers. Singapore, with its new luxury hotel developments such as Marina Bay Sands, became the most popular destination abroad for Indian travellers replacing Hong Kong, which slipped to fourth. Bangkok was second, moving up from seventh in H1 of 2010. Bangkok took over from London, which dropped to third position. There were nine Asian destinations in the top 20, four in Europe and seven in the US, headed by New York.

The list of favourite Indian destinations for international tourists had a familiar look with New Delhi, Mumbai, Bengaluru and Chennai holding their places at the top. Goa became less popular slipping from fifth to ninth.

The factor that travellers from economic powerhouses enjoys lower hotel rates, was also evident in other countries with strong currencies and economies and meant citizens from nations such as Brazil, Sweden and Switzerland benefited from lower prices in many destinations, particularly the US and UK where the USD and GBP struggled to hold their ground.

David Roche, President, Hotels.com said, “This year, for the first time, dramatic political and natural world events, such as the Japanese earthquake and Arab Spring, have caused the most pronounced level of hotel price volatility. However, despite some exceptional price movements, it is important to highlight that overall the picture has been one of gradual recovery with many room rates still on a par with what they were seven years ago, representing great value for the traveller.”

Roche further added, “Other factors such foreign exchange fluctuations, one-off political sporting, cultural or trade events and discounting by hoteliers can also influence prices but it’s important to underline the general health of the sector so far this year. This can be seen by the growth in the supply of rooms all over the world with nearly 6,000 hotel projects in development. This increase in accommodation also acts as a brake on prices and, once again, is good news for the consumer.”

“Individual markets in Asia Pacific showed marked differences, presenting a mixed picture of results. Overall lower average prices paid for hotels in the region means good news both for travellers coming into Asia and for travellers within Asia. During this period, consumers travelling to Asia have benefited from the favourable exchange rates in many of their currencies. One note of advice to travellers is to search and compare alternatives, as individual markets exhibit different trends.” added Johan Svanstrom, Managing Director of Hotels.com Asia Pacific.

The Hotels.com HPI is based on bookings made on Hotels.com sites around the world and tracks the real prices paid per hotel room (rather than advertised rates) for about 1,25,000 properties across more than 19,000 locations. The latest HPI looks at prices in the first half of 2011 compared to the same period last year.

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