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Corporate Travel World 2007 Reporter's Notebook--PwC: Hotel Rate Hikes Have Peaked.

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New York - Hotel rate increases will be hefty after travel buyers' negotiations later this year, but not on the same scale as in 2006, PricewaterhouseCoopers' hospitality and leisure group principal Bjorn Hanson told buyers and suppliers gathered here for Business Travel News' 23rd annual Corporate Travel World conference. Travel buyers, meanwhile, said they are struggling to maintain the integrity of their corporate hotel programs.

Rates increased by 7.1 percent in 2006, the highest growth in 10 years, Hanson said. This year, he expects that growth to moderate to 6 percent. "It won't get worse this year," he said. "Rates are going to get higher but not increase by as much as they did last year."

In fact, rates could be worse than they are, PwC's Hanson said. Increases have been significant, but have remained mostly below the rate of inflation, so in real dollars, the hotel industry still is not doing as well as it was in 2000, according to Hanson.

Hanson forecasted a pattern of decreasing occupancy this year, a prediction already manifested in 2007 industry performance thus far, even though industry leaders expect that to turn around (see story). In addition, construction should begin to accelerate throughout 2007 and 2008, he said.

Still, occupancy remains high, Hanson said, making the job more difficult for travel buyers trying to ensure booking at negotiated rates.

At a benchmarking session for Corporate Travel 100 travel buyers, participants said the difficulty in getting those negotiated rates is compounded by the increasing problem of "rate piggybacking." Travelers asking for companies' rates--even if they are not an employee of that company--are getting them at...

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