Marriott and other top US hotels enjoy increase in business travel

by Tiffany Millar on August 4, 2010

A sudden surge within the business sector towards travel has caused major US hotel chains to begin tentatively raising prices for its corporate clients after two years of discounts during the global recession.

Should Starwood Hotels & Resorts and Marriott International along with some of the other top US hotel firms manage to retain higher occupancy rates while still modestly increasing room rates, the entire market sector could be looking at a rise in earnings across the board. However, the success of the hotel companies will still balance precariously with the current economic climate in the US. Concerns in the business sector have been raised regarding the rate of recovery, which many fear spells continued issues for US business activity in the coming months.

Additionally, it is forecasted that business travellers will not take kindly to rate increases and insist on perks like free internet, extra services and complimentary breakfasts. According to Deutsche Bank analyst Chris Woronka, if the economy slows again, most hotel firms will shy away from 10 per cent rate increases.

Last month, Starwood reported that its negotiated corporate rates had continued to fall, dropping 20 per cent from 2008 levels. Many hotel firms negotiate their corporate accounts each fall, but the past two years of economic hardship have caused companies to take a hard stance forcing hoteliers to decrease rates to fill their empty rooms.

Despite slow economic recovery, however, corporate demand for hotels and business travel is undoubtedly on the rise. Starwood said that already middle of the week travel, which is typically business travellers, rose during the second quarter. Marriott also reported corporate room nights rising 16 per cent during the same time frame.

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