The Hotel Price Index™

Review of global hotel prices: January - December 2012

Introduction

The Hotels.com Hotel Price Index™ (HPI®) is a regular survey of hotel prices in major destinations across the world. The HPI is based on bookings made on Hotels.com and prices shown are those actually paid by customers per room per night, rather than advertised rates.

Now in its ninth year, the HPI is respected as the definitive report on hotel prices paid around the world and is increasingly used as a reference tool by the media, hoteliers, financial analysts, investors, tourism bodies and academics.

The HPI tracks the real prices paid per room per night by Hotels.com customers around the world, using a weighted average based on the number of rooms sold in each of the markets in which Hotels.com operates.

The international scale of Hotels.com, in terms of the number of customers, properties and destinations covered, makes the Hotel Price Index one of the most comprehensive benchmarks available. It incorporates both chain and independent hotels, as well as options such as self-catering and bed & breakfast properties.

This edition looks at the full year 2012, comparing the results with 2011. More than 155,000 properties around the world make up the sample set of hotels from which prices are taken of the almost 200,000 hotels on offer on the site.

photo of David Roche

Foreword

Welcome to the latest edition of the Hotels.com Hotel Price Index, our review of global hotel prices for the full year 2012.

The headline must be one of continuing recovery. Over the year, guests around the world paid 3% more for their hotel rooms than in 2011. In fact, several major regions grew faster than this, but the Eurozone’s problems combined to pull down the global average and slow growth in the second half of the year. This means that, whilst we’re reporting the third consecutive year of price increases, the average price of a hotel room has only risen to where it was back in 2005.

Leaders of the pack

It was still a tough year for many but three regions drew away from the rest, building on increasing business travel and higher consumer spending. The Caribbean saw a 6% rise, North America had one of its best results in recent years growing at 5% and the Pacific gained 4%, all outpacing the global figure. Asia added 2%, Latin America 1% and the Europe and Middle East region registered a slight fall.

Europe trailing

Europe is lagging behind as domestic markets stutter. The Eurozone crisis not only impacted prices in its own territory but had a knock-on effect across the region as financial insecurity dampened the propensity to travel. With a resurgence of economic prosperity unlikely in the immediate future, hotels have to adapt to new market conditions, to reach out to those travellers who are still on the move, particularly from China and Russia. My advice to consumers? Start packing for that European trip. It is unlikely that prices will continue to fall at this rate and there are some great deals around now just waiting to be snapped up.

The London effect

Anyone who was in London in the summer of 2012 would have been caught up in the atmosphere of excitement and optimism that permeated the city during the Diamond Jubilee celebrations and the Olympic and Paralympic Games. Overall hotel occupancy was healthy but did not reach the heady heights predicted, with many travellers avoiding the higher prices initially charged during the Olympic period. The average cost of a room in the capital certainly fell as the event approached and, for the rest of the year, hotels lowered their prices further to drive demand.

London has been left with a legacy of much improved stock with new hotel openings and many other rooms refurbished and it remains one of the best value global cities across all star ratings. The unprecedented worldwide exposure that its time in the spotlight brought will certainly encourage visitors going forward, particularly with the prospect of the royal birth this summer.

It will be interesting to see what lessons were learned in London for hotel pricing strategy in Rio de Janeiro as the city prepares to host two major sporting events with the 2014 World Cup and the 2016 Olympic Games.

Build it and they will come

International tourism is expected to climb again in 2013*. Much of the focus of the hospitality industry is now moving east, where the rate of increase is the highest and new infrastructure is helping to drive travel patterns. The Asia/Pacific region added twice as many new rooms as Europe in 2012, with expansion in both the upmarket and economy sectors, and will account for 40% of the world’s new builds in 2013**. China has plans to build 70 new airports in the next few years and to expand its 100 existing airports***. New airlines have come onto the scene offering lower prices, fuelling the desire to travel.

At Hotels.com, we are looking forward to 2013. It is a landmark time for us, particularly in Europe. It was ten years ago that we took the strategic step in expanding our company by launching localised websites in 13 European countries as well as Australia and Canada. Over the last decade, we have expanded further into Europe as well as Latin America, Asia, the Pacific and Africa and now have more than 85 localised sites around the world.

The scope of our network means that the data and consumer insight gathered for this report is substantial and reliable. What’s up, what’s down, what’s blooming or fading, the answer is here.

Thanks for reading and happy travelling.

David Roche
President, Global Lodging Group

Contents

  1. Global price changes
  2. Price changes in global city destinations Global hotel price changes 2012 -v- 2011
  3. Price changes by country Global hotel price changes by country 2012 -v- 2011
  4. Focus on the UK UK hotel price changes 2012 -v- 2011
  5. Prices paid at home and away
  6. Where to stay for £100 a night
  7. Average room prices by star rating
  8. Luxury for less
  9. Travel habits
  10. Travel talk
  11. Hotels.com 2012 Highlights
  12. About Hotels.com
  13. For further information

The HPI report focuses on two main sources of data:

The first section (Chapter 1) shows the global and regional Hotel Price Index for 2012, comparing them with previous years.

The Index is compiled from all relevant transactions on Hotels.com during this period, weighted to reflect the size of each market. By representing hotel price movements in an index, Hotels.com can illustrate the actual price movements as paid by consumers, without foreign exchange fluctuations distorting the picture.

The Index was started in 2004 at 100 and includes all bookings across all star ratings from 1- to 5-star.

The second section (Chapters 2-8) shows hotel prices across the world per room per night as paid by travellers from the UK in 2012 compared with 2011. This shows the changes in real prices paid by UK consumers, reflecting both movements in exchange rates and hotel pricing. In Chapter 4, figures are compiled from global bookings in all currencies.

Prices are rounded to the nearest Pound Sterling and percentage figues to the nearest percentage point.

Chapter 9 covers the most popular destinations within the UK for overseas visitors and overseas for UK travellers in 2012.

The final chapter focuses on some additional, more light-hearted travel facts identified by Hotels.com.

Reports are also available in other currencies. Please contact press@hotels.co.uk.

Follow the discussions on Twitter at #HotelExperts.

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