Hotel rates set new year-on-year growth record

According to data in The Pegasus View by Pegasus Solutions, hotel ADR continued a northward trend in April 2012, realizing record or near-record growth margins over rates paid in 2011. North American corporate hotel rates set a new year-on-year growth record, increasing +9.3% over 2011, beating a previous record of +7.1% set in February by more than two percentage points. Global rates for hotels booked through the global distribution systems (GDS), representing mostly business travel transactions, grew +5.5%, the greatest growth margin since July 2011. Leisure rates also soared as global bookings made through online channels increased by +9.1% over April 2011, and North American rates rose +7.3%. “A common misstep many hotels made in 2001 and 2008 when bookings fell was to automatically abandon strategy and slash rates,” said Mike Kistner, chief executive officer of Pegasus Solutions. “April’s numbers show that corporate rates paid in April 2012 were higher than four of the five previous years, and just shy of three percentage points of those paid in 2008. Hotels are staying true to their product, not only maintaining rates, but also driving them back to where they need to be. Combined with bookings growth, this rate growth has corporate revenue up by double digits over all five previous years.” Following a drop in March of -7.5%, global corporate bookings rebounded to just -0.5% off of 2011 in April. If not for February’s extra day, April would have represented the global corporate sector’s best booking performance against prior year for 2012 thus far. North America’s business bookings made similar progress, coming within -5.8% of prior year in April after falling -9.0% from last year in March. Leisure reservations also improved from March losses. The global gap against the year before was narrowed from -7.9% in March to -6.4% in April; likewise, North America moved from a -9.0% slide in March to a -7.9% shortfall in April. Looking forward, summer corporate bookings are proceeding unevenly with the potential for greater growth in June and August expected, while rates should continue with steady increases. Leisure bookings are expected to hover near summer 2011 levels with ADR likely to drive revenue growth. Data reported in The Pegasus View comes from billions of transactions processed monthly by Pegasus Solutions facilitating more than $16 billion a year in hotel transactions. It reflects data drawn from both GDS and ADS transactions, representing the business and leisure markets respectively for nearly 100,000 hotels worldwide.