Of the 50 cities surveyed, 33 reported a year-on-year increase in hotel rates with unexpected boost from Asian cities, such as Istanbul.


Key trends:

•  Sydney (pictured right) joins the ranks of the top 10 most expensive cities worldwide due to a 16% increase in average room rate in the first half of 2011, which was sparked by a significant increase in the number of new business events.


•  Over two-thirds of the cities surveyed reported hotel rate growth, compared with only one-quarter of cities last year, supporting signs of global recovery and pick up in business travel in recent months.


•  The strongest performing region was Asia Pacific, where average room rates rose by 7% due to the concentration of hotel development and financial centres, including Hong Kong and Singapore.


•  Singapore jumps seven places up the list of most expensive cities in the world, owing to a 10% increase in average year on year room rate due to high demand from business travellers.


•  Hong Kong fell out of the top 10 most expensive cities in the world for travellers from the UK. This can be attributed to the GBP strengthening against the HKD earlier this year.


•  Moscow retained its top position with the most expensive hotel rates despite a modest rate increase in local currency and GBP. It bounced back from last year’s 12% decrease despite many new hotel openings, demonstrating the city’s position as a strong business destination.


•  Istanbul achieved the highest increase in hotel rate of 37% due to the growing interest surrounding the city as a business destination. Travellers to Istanbul are also conscious of its security issues and more inclined to stay in five-star accommodation.

Stewart Harvey, HRG group commercial director, said although many large companies have put in place travel restrictions and cost reductions, hotel rates in the majority of cities surveyed increased.

“Demand is driving the rate. We can expect hotel rates to continue to rise as more economies grow and business demand picks up.”

Margaret Bowler, HRG director Global Hotel Relations, said the shift from Europe to Asia in hotel rate growth was significant as it demonstrated changing business priorities.

“The rates demonstrate that demand has increased for travel to emerging regions as a result of the need to do business and that travellers are willing to pay higher hotel costs during their stay. Outside of Asia, Istanbul in particular has come out with strong rate growth.”

Many of the cities with the top 10 most expensive average room rates are the same as in 2010, with the exception of Hong Kong and Abu Dhabi, and the new additions of Sydney and Istanbul.

All of the cities listed in the chart above have experienced rate growth in local currency ranging from 2% to 24%, with Istanbul, Zurich and Sydney reporting the highest variance. 



Moscow has retained its top spot despite a modest rate increase of 2% in local currency and 1% in GBP. It bounced back from last year’s 12% decrease in the midst of many new hotel openings, reinforcing the city’s position as a strong business destination. 


Newcomer Istanbul reported the highest rate growth in both local currency and GBP. A large part of this growth can be attributed to growing interest in Istanbul as a business destination, combined with travellers’ preference to stay in five-star properties over three and four-star.

Bowler explained, “Many business travellers visiting Turkey choose top end hotels in Istanbul due to safety concerns. For example, they often request a hotel with a bar, so that they do not have to walk far to meet business partners.”
With the exception of Istanbul, the cities with the top five highest rate increases compared to last year showed modest growth in local currency. (chart above)

Both Madrid and Paris saw rate growth in GBP and local currency, resulting from a flat euro exchange rate and a strong six months of trading.

Like these European cities, Singapore also experienced a 5% year on year increase in local currency due to high demand from business travellers. 


Cape Town and Abu Dhabi experienced the largest rate decreases with 53% and 42% in local currency respectively.

Cape Town rates have suffered since the 2010 FIFA World Cup, where many new hotels were constructed to meet the increased demand during the tournament. Although the demand has now decreased, the additional capacity is causing price competition.

Abu Dhabi has encountered a similar situation with increased supply and decreased demand due to the rise of business in the city and the recent safety concerns around unrest in the Middle East.

Rates in key global cities show a mixed picture of the health of business travel, as hotels in some cities and regions are reporting rate growth in local currency and others are reporting rate decreases. (chart above)

Frankfurt displayed growth in both quarters, as did Paris, potentially led by the pick up of the banking sector in the regions.

Although Johannesburg hosted the FIFA World Cup last year it reported flat figures in Q1 and a rate reduction of 6% in Q2 demonstrating that, as with Cape Town, there has been no lasting impact on hotel rates from the World Cup. 


When measured in GBP, with the exception of Eastern Europe and Africa, all regions saw average room rates increase albeit by a small amount. (chart above)

The strongest performing region was Asia Pacific where average room rates rose by 7%, due to the concentration of hotel development and financial centres including Hong Kong (3% rate decrease) and Singapore (10% rate increase). 



In Europe, a 1.6% rise was recorded. This was primarily aided by strong markets in France and Germany.

The increase in Paris hotel rates was driven by the Paris Air Show in June, which resulted in limited hotel availability and less competition. Propelled by the finance sector, Germany’s hotel market has become stronger each year. 



Eastern Europe, however, fared worst and had the highest regional rate decrease of 6.6%. Moscow has historically pushed up this regional rate, however the city only managed a 1% increase this year and was not able to pull up the overall regional average.



In Africa, the contrast between room rates in the first half of 2010 and the same period 2011 is marked, from a 16% increase January to June 2010 to a 5% drop in the same period this year. This demonstrates the effect hosting the FIFA World Cup had on the country last year, in terms of occupation volumes and opportunities to maximise overall rates. 



Despite widespread political unrest, the Middle East & West Africa (MEWA) recorded a flat year on year although it is certain that occupancy was down. 


“Slow and steady is the key theme here, with most regions recording small room rate increases – an indication that business travel is increasing too. The overall picture is one of stability, which should help to reinforce and renew business confidence,” 
Bowler concluded.