November 21, 2017
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While hotel industry leaders were expecting corporate contract rates for 2013 to increase by a national average of 7% to 9%, corporate travel managers were planning for increases of 3% to 5% instead.
Well into the corporate rate negotiation season, which begins in September and ends in December, hotel executives are reporting they are seeing year-over-year increases in rates thus far. That rate growth, however, is decreasing on a year-over-year basis particularly because of economic uncertainty coming from the business sector, some executives said during third-quarter earnings calls.
Before the corporate rate negotiation season began in September, rate expectations from hotel executives and corporate travel managers greatly differed, according to a preliminary outlook conducted in August by Bjorn Hanson, divisional dean at the New York University Tisch Center for Hospitality. While hotel industry leaders were expecting corporate contract rates for 2013 to increase by a national average of 7% to 9%, corporate travel managers were planning for increases of 3% to 5% instead, Hanson said in a release. His preliminary estimate was that the result of negotiations for next year would call for a 5% to 6.5% increase in rates.
“One response of buyers to higher rates is to reallocate the portfolio of contract rate hotels to include more upscale, select-service and limited-service hotels in place of luxury and upper-upscale hotels, for example,” Hanson said in the report.
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