Forecast: Negotiated Corporate Hotel Rates to Rise in 2015

This year has been a seller's market for hotels. And next year won't be any different, according to Bjorn Hanson, Ph.D., clinical professor at the Preston Robert Tisch Center for Hospitality and Tourism at the New York University School of Professional Studies.

In his latest lodging industry forecast, Hanson tackles the subject of corporate and contract rates at U.S. hotels, which represent almost 20 percent of occupied U.S. room nights and almost 30 percent of U.S. lodging industry revenue. Negotiated rates, he predicts, will rise by record margins.

"The emerging outlook is for corporate contract rates to increase the most since NYU started preparing this forecast, with a national average of 5.5 to 6.5 percent for 2015," Hanson reported in his forecast. "For 2014, average negotiated rates (ADR) increased approximately 4.5 percent, compared with the overall ADR increase for U.S. hotels of about 4.0 percent."

Coupled with an increase in rates is a trend among travel buyers to contract with fewer luxury hotels.

"Another trend that is continuing is for buyers to reallocate the portfolio of contract rate hotels to include more upscale, select service, and limited service hotels in place of upper upscale hotels and full-service hotels," continued Hanson, who also noted an increasing trend in which hotels are charging separately for services and amenities. "A trend that accelerated in 2012 and 2013 was to charge separately for some services and amenities instead of including these charges in negotiated room rates. In 2010 and 2011, there had been a trend for corporate and contract rates to include services and amenities, including Internet access, fax charges, use of fitness centers, and breakfasts; that practice is generally being reversed."

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