October 02, 2015

2016 corporate hotel rate increases could be largest in three decades

The average corporate negotiated hotel rate will increase between 6.5 percent and 7.5 percent in 2016, according to the Tisch Center for Hospitality and Tourism. That means the average rate could mark the highest rise in corporate rates in the history of NYU’s annual report.

Bjorn Hanson, a clinical professor at the New York University School of Professional Studies Tisch Center for Hospitality and Tourism, said this year’s outlook shows that hoteliers are trying to reach a more favorable parity between transient and corporate rates than in previous seasons. “There is still some catching up to do from the perspective of the hotel companies,” Hanson said. “In recent years, the negotiated corporate rate increases ended up being less than average daily rate increases, so even though corporate rates have been increasing, [they have] not as much as other rates in general.”

Hanson said even though travel buyers “read the headlines” around the hotel industry, some still may be surprised at the effect that high occupancy, which is projected to continue at levels not seen since the 1990s, will have on negotiations. “It gives the hotel executives a sense of confidence that if some of these negotiated contracts don't work out, there's plenty of other demand to help achieve a favorable occupancy and maybe even at a higher rate,” Hanson said.

NYU based the analysis and estimates on interviews with industry executives and corporate travel executives, on evaluation of industry financial data, on press releases and on information available on hotel and brand websites.

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