2017 Hotel Pricing: A Tale of Two Coasts

This post was originally featured on the Cvent’s Elite Meetings Blog, Meet Well.

Research presented at the annual conference of the Global Business Travel Association this summer (July 15-20) in Denver presented a mixed picture of what planners could expect in the coming months when it comes to negotiating 2017 hotel rates. For North America, the trade group for travel managers is predicting hotel rates will jump an average 4 percent, the steepest increase of any global region. In fact, projected rates in most other regions (Asia Pacific and the Middle East & Africa among them) are expected to decline, compared to 2016.

The GBTA described the upcoming scenario as a “tale of two coasts.” Depending on which coast they choose to book, planners can find significant discrepancy in rates. The West Coast, for example, including Seattle, Los Angeles, San Jose, and Vancouver, is experiencing high single to double-digit growth attributed to the high-tech boom and a related shortage of hotel rooms.

By contrast, the East Coast, including New York City and Toronto, is experiencing rate growth that’s either flat, negative or low single-digit due to spikes in hotel supply. Based on input from the GBTA’s research arm in conjunction with Carlson Wagonlit Travel, the Association expects overall meeting demand in North America to continue to climb next year. Group size is likely to rise 3 to 5 percent, while the cost per attendee per day jumps a comparable amount.

Also complicating matters, the availability of hotels and related venues across North America generally speaking is predicted to grow tighter, while contract provisions are less flexible. Much of this is predicated on hotels’ performance in the first half of 2016, when the industry saw stronger than anticipated increases in group size (up to 10 percent larger) year-over-year.

The operative words here, of course, are “generally speaking.” As with any broad-brush prediction, planners know there are always exceptions to the rule: How large is the piece of business? Are shoulder season dates an option? Rooms aside, what additional revenue streams can the hotel expect (banquets, other catered meal functions, golf and spa programs, pre and post-bookings, and so on)?

Lastly, muddying the waters further, the Association cites the high level of global uncertainty on a whole passel of political, economic and social issues heading into 2017. The bottom line for the GBTA: travel buyers, including planners and incentive trip organizers, have to be more nimble than ever in performing their jobs.

Written by Bruce Serlen.