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But weak pound means UK travellers need to shop smarter to feel benefits

Global hotel prices drop 12%

The average price of a hotel room around the world fell by 12% last year, according to the latest Hotels.com Hotel Price Index. Hotel prices in December 2008 were more than one tenth lower than they were the year before and room rates were just 1% above their level in January 2004, when the Hotel Price Index was started. The 12% fall in room rates* was driven by price drops across every continent.Prices in North America fell by the greatest extent, down 12% in Q4 2008 compared to the year before. Prices for hotel rooms in Europe fared little better, dropping 10%…

The average price of a hotel room around the world fell by 12% last year, according to the latest Hotels.com Hotel Price Index. Hotel prices in December 2008 were more than one tenth lower than they were the year before and room rates were just 1% above their level in January 2004, when the Hotel Price Index was started. The 12% fall in room rates* was driven by price drops across every continent.

Prices in North America fell by the greatest extent, down 12% in Q4 2008 compared to the year before. Prices for hotel rooms in Europe fared little better, dropping 10% during the same period. In the Caribbean and Latin America they fell by 7%, while in Asia, hotel prices held up slightly better falling just 2%.

The Hotels.com HPI tracks the real prices paid per hotel room rather than advertised rates. It is based on prices actually paid by customers for 68,000 hotels across 12,500 locations around the world. The latest HPI looks at hotel prices for the period October to December 2008, compared to the same period the year before.

David Roche, President, Hotels.com Worldwide, comments: “Room rates dropped significantly in the final three months of last year as hoteliers around the world cut prices to try to fill their rooms. While last autumn, North America was the only continent to see the average room price fall, the latest Hotel Price Index shows the economic downturn is now affecting hotel prices on all continents. Price falls were most dramatic in North America (12%), but Europe, the Caribbean and Latin America were not far behind. The good news is that there are many bargains to be had for travellers. This year really will be the year of the deal.”

For UK travellers, the weakness of the Pound against the Euro and the Dollar meant that price falls were not felt quite so keenly as elsewhere in the world. In fact, in many destinations, prices paid by UK travellers were actually up, compared to the year before. Across the Eurozone, room rates fell in Italy and Ireland, but were higher in Q4 2008 than they were in Q4 2007 in every other major Eurozone destination for travellers from the UK.

Prices for UK travellers rose to the greatest extent in Switzerland, where the Swiss Franc has also remained strong against the British Pound. However, prices in the UK fell dramatically during the same period – down by 12% in 2008, the steepest fall across the major European nations. Average prices paid by UK travellers for US hotel rooms were also down – by 4% year-on-year – despite the strength of the US Dollar against the Pound, demonstrating the depth of the cuts that hoteliers in the US had to make to rates.

Weak Sterling meant that prices in many destinations stayed relatively high for UK travellers in Q4 2008, and in many cities actually rose. While prices in the world’s most expensive city, Moscow, fell by 6% to £207 for UK travellers, prices across most of the major cities – particularly in the Eurozone – were up.

The European business centres of Geneva (£136) and Zurich (£119) experienced some of the steepest increases in room rates for UK travellers. Prices in these cities rose by 34% and 20%, respectively, taking them into the top 10 in the price league table. This was largely due to the Swiss Franc’s strength against the Pound.

For the first time, London fell out of the top ten in the global cities price league. London experienced price drops of 12% year-on-year to just £111 per room per night, as the booming influx of European travellers to the capital failed to support the city’s hotel prices and owners sought to encourage visits from domestic travellers, bringing prices down.

Across the major Eurozone destinations, prices for UK travellers were up: in Paris by 13% and in Milan by 9%. In Frankfurt prices were up by 6%, while prices in Madrid rose 3% and those in Barcelona were up by 2%.

David Roche concludes: “Our report shows that hoteliers around the world are being forced to cut rates to fill their rooms. Due to weak Sterling, UK travellers will have to work a bit harder to find the bargains but there are still plenty to be had. For travellers from any part of the world, this is a great time to explore: travel has not been this cheap since January 2004. The indications are that 2009 will continue to be a good year for travellers. If Sterling strengthens, UK travellers will start enjoying the great savings our European and US counterparts are currently experiencing.”

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Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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