Spokane Journal of Business

Hotel price index reports strong growth

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The average price of a hotel room around the world rose by 3 percent during 2012, compared with the previous year, according to the latest Hotels.com Hotel Price Index.

The rate of increase has moderated when judged against the 4 percent rise in 2011, as the Eurozone's problems pulled down the global average and slowed growth in the second half of the year.

Three regions drew away from the rest. The Caribbean saw a 6 percent rise, North America had one of its best results in recent years, growing at 5 percent, and the Pacific gained 4 percent, all outpacing the global figure. Asia added 2 percent and Latin America 1 percent while the Europe and Middle East region registered a slight fall.

As the American hotel industry continued to strengthen, so did consumers' confidence, as is evident in the 5 percent increase in spending on domestic hotel accommodations over last year.

Austin, Texas, (up 9 percent) rose not only in price, but in popularity, jumping three spots to number 17 on the top domestic destinations for Americans list. San Antonio, Texas (up 4 percent) also is on the rise, moving into the top 10 on the U.S. favorites list.

Big Sur, Calif., with an average daily rate of $771, is making waves worldwide, jumping to the no. 1 ranking on the HPI most expensive cities list, while Oahu, Hawaii (up 68 percent), also makes a splash in third place on the list of world's greatest price increases.

The U.S. saw an influx of international visitors who spent record amounts on travel and tourism in 2012, according to the U.S. Commerce Department, which meant hotels had less need for discounting. The foreign guests who spent the most on U.S. accommodations, according to the Hotel Price Index, were travelers from Japan, South Africa, and Norway, respectively.

Launched in 2004, the HPI looks at prices that people actually paid for their hotel rooms around the world. The 2012 Index stands at 107, ten points behind its 2007 peak of 117 and only just ahead of its 2005 level of 106.

David Roche, president of Expedia Inc.'s Global Lodging Group, says, "Europe's hoteliers aren't immune from the region's economic problems, and they weren't able to keep pace with a recovering global market in 2012. Although prices have risen globally, a hotel stay still offers consumers great value, with rates consistently below their peak levels of five years ago."

In the Caribbean, the trend towards more all-inclusive holidays has pushed up the average price paid. In the Pacific, the mining boom in Australia and strength of the Australian dollar continued to drive strong city hotel rates but made it difficult for some leisure destinations dependent on inbound demand. Latin America has witnessed a sustained period of growth in prices paid by customers over the past few years, driven primarily by the booming economies in the two key markets of Brazil and Mexico.

In Asia, a roster of events moved prices up and down across the region, including downward pressure on rates in India, due to a precipitous fall of the Rupee, travel demand shifts due to the politically sensitive situation around the islands in the East China Sea, and price bounce-backs from the 2011 earthquake, tsunami and nuclear disaster in Japan, and flooding in Thailand. The continued increase in the number of Chinese international travelers helped fill hotel rooms and the expansion of low cost carriers also boosted travel opportunities.

"International tourism is expected to climb again in 2013," says Roche. "Much of the focus of the hospitality industry is now moving east, where the rate of increase is the highest and new infrastructure is helping to drive travel patterns. The Asia/Pacific region added twice as many new hotel rooms as Europe in 2012 and will account for 40 percent of the world's new builds in 2013. Rates here are rising but the region still offers great value for travelers with some of the lowest prices in the world."

Hotels.com is an online accommodation booking brand. Through the Expedia global network of websites, it says it connects travelers with almost 200,000 properties around the world, ranging from international chains and all-inclusive resorts to local favorites and bed & breakfasts.

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