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International Meeting & Event Management

HOTEL RATES TOUGHEN
      Business Travel News reports that buyers are facing their toughest hotel negotiating environment in several years as hotels are pushing for rate increases amid rising demand.  Bjorn Hanson, Divisional Dean of the New York University Tisch Center for Hospitality, Tourism & Sports Management, said that business travel demand began to improve in March of this year but the hoteliers did not respond to the market then just in case it was a aberration.  However, a demand continues to pick up through July, hoteliers are coming to the table for the fall in a stronger position this year.
      "Buyers should prepare for the most aggressive negotiating posture in three years...The increased amount of business travel has shifted the balance of power.", Hanson said.
      Timing for negotiations also is a challenge for buyers this year. As of early August, most buers had not started negotiations, according to Bob Brindley, Vice President of BC Travel Consulting Division Advito.         "Many buyers are reluctant to be in the first wave of negotiations, hoping for the early birds to talk down some of the proposed increases", he said.
      Buyers will face the toughest time in major markets like New York, Los Angeles, and Chicago. Starwood President & CEO, Frits van Paasschen said that during June, midweek occupancy levels topped 90% for the company's properties in New York, Boston, and Chicago and reached 98% in London.  Smith Travel Research also reportrs that in New York, the average daily rate for hotels increased by 15.4% over a year in June.
      It is predicted that rate negotiations will be easier in convention-heavy cities such, as Orlando and Las Vegas,  as meetings demand recovery has been less robust.  Buyers will face the largest potential increases in the upper scale and luxury tiers.  Smith Travel Research reported that luxury ratres in the USA were up by 4.7% year over year in June, the largest increase among the tiers.  Economy hotel rates, however, were down by 3.2% year over year, and midprice hotel rates were also slightly down.  Hanson thinks that hotels will likely hold rates steady this year if buyers agree to unbundle such amenities as parking or breakfast.