Corporate suites in chain hotels will become more expensive for business travelers
Wednesday, January 30, 2013
As the global economy begins to show signs of gradual stabilization, many organizations are looking to the future with regard to business travel. In previous years, some companies have been reluctant to maintain pre-recession levels of spending on business travel due to hesitation in the financial markets worldwide, but many analysts and experts predict that the sector will see moderate gains in 2013. With more executives taking to the road to secure new business, close deals and expand into emerging markets, the need for cost-effective accommodations will likely become greater in the coming year. However, according to Business Travel News, this could prove challenging for many business travelers.
Executives speaking at the recent Americas Lodging Investment Summit said that hotel rates will continue to increase steadily during the next three years. The need to maintain pace with escalating costs was cited as a major reason for the continued rate hikes. While supply is likely to remain stagnant, demand is expected to increase sharply as more executives head out on business trips.
"We're looking at 1 percent growth in supply [this year], which is still on the low side, and demand is increasing," Mark Laport, president and chief executive officer of Concord Hospitality Enterprise, told the news source. "This is not slam-dunk, killer business, but most of us think we're in for decent times in 2013, 2014, 2015 and even 2016."
While this will be welcome news to property management companies in the hospitality sector, it is unlikely to be well-received by business travelers. The cost of corporate suites in chain hotels has been rising steadily in recent years, and further rate hikes could force budget-conscious executives to seek out more cost-effective solutions. Serviced apartments and corporate housing offer the same quality of service as chain properties, but also provide companies with the kind of competitive pricing that is likely to become increasingly important in coming years.
Insult to injury
If rising hotel rates were not enough to inconvenience frequent business travelers, executives could face increasing numbers of fees when staying at chain hotel properties. According to NBC News, many hotels will begin applying higher fees to even the most loyal return customers in an attempt to compensate for the sluggish growth observed in the hospitality sector last year.
The news source reports that fees for tiered Wi-Fi service are likely to become an increasingly common expense in hotels throughout the year. Different fees will be applied to customers depending on their bandwidth usage and data allowances, meaning that executives who need to catch up with colleagues in central offices while traveling could be hit with substantial additional costs just for the privilege of using the hotel's wireless internet service.
Early departure and cancelation fees are likely to become increasingly severe as well. In today's fast-paced business world, last-minute changes to itineraries are far from unusual, and as a result, executives who are forced to amend their plans while traveling could face substantial surcharges for changing their arrangements.
Bjorn Hanson, divisional dean at New York University's Preston Robert Tisch Center for Hospitality, Tourism and Sports Management, told the news source that while hotel charges declined significantly during 2009 when the Great Recession was still affecting millions of businesses, hotels may be less hesitant to apply fees as the economy improves and demand increases. Rising occupancy rates and limited availability of inventory mean that hotels will be "more courageous and less concerned about offending guests," according to Hanson.
With business travel expected to grow in 2013, executives have to make every dollar count. In light of rising fees and higher rates at chain hotels, corporate accommodation may become an increasingly attractive option for budget-conscious business travelers.