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The® Hotel Price Index™ (HPI™) is a regular survey of hotel prices in major city destinations across the world. The HPI is based on bookings made on and prices shown are those actually paid by customers (rather than advertised rates) for the first half of 2012. The report largely compares prices paid in 2011 with prices paid in 2012.

David Roche, President of

Preface from David Roche, Global President of

Our Hotel Price Index enters its ninth year with news of rising prices across all of the regions in the survey – the first time we’ve been able to say this in five years. In the first half of 2012, the average price paid for a hotel room, regardless of currency, increased by 4%. Some of the world’s largest hotel markets outran this, with the Pacific region up 6% and North America and the Caribbean growing at 5%, a pace that suggests that recovery for the hospitality sector is gathering speed, at least. The news from Europe and the Middle East, perhaps expectedly, is less rosy, with a 1% rise showing that hotel prices match the European economic prospects.

Looking beyond the headline figures, there are some interesting trends to examine more closely.

Enough Already

The hotel market has been victim to a full spread of emergencies and disasters over the last four years, both economic and natural – from ash clouds to debt crises, via earthquakes and revolutions. Although these phenomena won’t stop, it looks as if their effect will be less marked on the hotel industry in 2012. Prices in Asia rose 4% overall as Japan bounced back, with significant price increases in its major cities for some travelers. Thailand has seen similar recovery from the floods of 2011– many major destinations are more expensive than a year ago.

Markets that saw collapsing demand as a result of civil unrest are also recovering. Jordan, Saudi Arabia and Tunisia have all seen significant rises, and even Egypt, which saw steep price decreases in 2011 as tourists changed travel plans to safer destinations, seem to have turned a corner.

The Chinese Are On Their Way

It’s not a new observation that the dependence on growth from China extends beyond its borders – and several major travel destinations can be added to the list. Chinese travelers are now more likely to travel independently, be less worried by visa requirements, and spend more on travel and shopping overseas. Chinese spend on international tourism grew $18 billion in 2011i alone. This demand has had an effect on popular travel destinations for Chinese tourists, such as Hong Kong or Taipei which saw rates increasing.

Club Med

Weaker domestic demand has now really begun to hit hoteliers in the key Southern European markets. Local currency prices fell in Greece, Italy, Spain and Portugal. Although softness in international demand is driving some of this, falling consumer confidence, and spending power, are the bigger issues. The outlook for pricing here may be as difficult to read as the macro economic situation as a whole, but it’s likely to mean great deals for those who want, and can afford to travel to some of Europe’s top destinations.

Tournament Tourism

The impact of the Olympics on London’s economy has become a hotly debated topic. It’s clear that hotels have cut their prices sharply in the run up to the Games, with rates only slightly above summer 2011. Whilst many have come to London, other travelers – mainly for business or in groups- have stayed away, although we do expect them to return later in the year. In other cities, the impact of sporting events on tourism looks to be more universally positive, with strong rises for Kiev on the back of Euro 2012 for example, and Helsinki had its own moment in the sun as host of the European Athletics Championship and other international tournaments. The message looks to be that major events do benefit a destination’s hoteliers, except perhaps the biggest of them all.

U.S. Recovery – Go West

The U.S. market has been in slow recovery since the beginning of 2010, with the latest figures suggesting this is gathering speed. The West Coast leads here, with a local price increase in major cities such as San Francisco and Los Angeles, and further major destinations are following, from New York to Miami. The themes are consistent – increasing conference and business travel combined with higher consumer spending, produces higher levels of occupancy. The second half of the year, with increasingly mixed economic signals, will be interesting to watch.

So, whether you are an industry analyst or deal hunting traveler, read on and let be your guide to what’s up, what’s down, what’s new and just who the biggest spending tourists actually are.

David Roche