Business travelers face high hotel fees in Russia

Monday, February 4, 2013

Business travelers face high hotel fees in Russia

When it comes to executive travel, organizations face a range of challenges. From lowering corporate airfare to securing suitable accommodations, the rapidly changing landscape of the business travel sector presents companies and executives with many challenges. The rising rates of corporate suites in chain hotels is becoming an increasingly difficult problem for travel management professionals to overcome, and this is particularly evident in emerging markets such as Russia.

Challenging rates
According to a recent report, Moscow has the highest hotel rates of any city in the world. This is the ninth consecutive year that Moscow has topped the list of the world's most expensive cities for business travelers. Other destinations, such as Laos, Nigeria, and New York, also ranked highly in the list, which was compiled by British data management consultancy firm Hogg Robinson Group. 

The average nightly rate at Moscow hotels is around $414. In Laos, executives can expect average rates of $361 per night, while business travelers staying in New York should be prepared to pay around $350. The management firm also noted that the average nightly rate at hotels worldwide increased by 1.4 percent during 2012, in comparison to the 1 percent year-over-year increase observed in 2011. Rising hotel rates across the globe may result in more companies using alternatives to chain properties, such as serviced apartments and corporate housing in an attempt to save money.

'Bullish' growth
While Moscow's hotels are the most expensive in the world for business travelers, executives in North America are facing rising rates as well. Emboldened by the moderate gains in economic growth observed around the world, many hotel chains in North America have seen increased demand and limited availability of inventory as a means to increase rates.

"With the European economy generally flat, it's no surprise that business travelers are chasing the money," reads a summary in the report. "More and more focus is going to emerging markets, with Latin America in particular making impressive strides in terms of attracting business travelers. Having said that, we're seeing a real upswing in demand right across the Americas, and there are signs that business travel to the U.S. is bouncing back."

Although the strengthening global economy is welcome news to many executives, challenges in securing suitable accommodations at reasonable rates seem likely to remain a primary concern for most organizations. With limited inventory and heightened demand, corporate suites in chain hotels could become less attractive to budget-conscious executives in the coming months.