Demand for serviced apartments could rise as hotel rates, occupancy rise across Americas
Friday, October 26, 2012
Many issues affect the decision for business travelers to stay in corporate housing or executive hotel suites. Availability, price and amenities are commonly cited as determining factors for business travelers when considering accommodations while on the road. According to Business Travel News, the average rates and occupancy of hotel suites across the Americas rose this year, the only global region in which this trend was reported.
Supply and demand
The news source reports that, according to a report published by STR Global, the average rate of a hotel suite in the Americas rose by 3.6 percent year-on-year. Occupancy in chain accommodations also increased in the region, rising .4 percent to 63.4 percent. While some experts claim that this means confidence is returning to the hospitality industry, it could also indicate that demand for serviced apartments and corporate housing could rise as the average daily rate (ADR) increases.
Key findings of the report revealed that San Francisco, California, was the city with the highest increase in ADR at 14.3 percent. Other destinations that reported significant rises in rates included Santiago, Chile, with 13.2 percent and Rio de Janeiro, Brazil, with an ADR rise of 12.7 percent. As cities across the Americas continue to report bullish projections in the business travel sector, other destinations may be subject to similar increases.
Prolonged uncertainty in the Eurozone
Although occupancy in hotels in many European cities was down by an average of .4 percent, it remains 13.2 percent higher than the Americas region at 76.6 percent. However, the ADR in cities such as the Austrian capital of Vienna rose sharply by more than 22 percent. Prague in the Czech Republic and Reykjavik in Iceland also reported significant increases in ADR of around 15 percent.
While this may be welcome news for hoteliers in these cities, it places additional financial strain on companies seeking to maximize their return on investment from business travel excursions. As a result, demand for corporate housing and serviced apartments could rise to offset the increase in costs reported in many cities throughout Europe and the Americas.
According to the San Francisco Business Times, occupancy and ADR at hotels in the city are at the highest point ever recorded, but some industry experts remain unconvinced that this signifies a shift in confidence in the hospitality industry. As prices continue to rise and demand for suites outpaces availability, corporate housing may become an increasingly viable alternative for modern businesses.