T&E Expense for Business Travelers May Rise

Business travelers should get ready for higher T&E expenses, according to the "2007 Hotel Survey" released on February 14th by Hogg Robinson Group of UK which studied the hotel rates in 50 cities across the world.

"The benefit felt by the strong British Pound, which has substantially benefited UK corporates throughout 2007, is unlikely to continue to such an extent throughout 2008," said Margaret Bowler, HRG Global Hotel Relations Director.

"As a result, business travel may become more expensive for UK corporates and HRG´s role as a corporate services provider will become more important than ever in helping to control business expenditure."

The increase was especially pronounced in Moscow where hotel rates went up by a painful 93% since 2003. Moscow is followed by New York City with the second most expensive hotel rooms in the world.

Business travelers have paid ₤ 270 ($ 540) for an average hotel room in Moscow and ₤ 191 ($ 382) in NYC.

The top two were followed by Paris ₤ 171 ($ 342), Dubai ₤ 164 ($ 328), and Milan ₤ 164 ($ 328).

However, in terms of one year increase over 2006-2007, Mumbai, India holds the distinction with 37% hike in the price of an average hotel room. Mumbai was followed by Barcelona (18% annual increase), Aberdeen (26%), Munich (12%), and Moscow (11%).

Only 5 out of 50 cities have actually registered a decrease in average hotel rates: Bangalore and Philadelphia (5% decline), Tokyo and Bristol (2% down), and Liverpool (1% decrease).

And for those business managers intending to visit China this year, the study has this to say:

"The Beijing 2008 Olympic Games are expected to provide a catalyst for growth in hotel occupancy levels in China and this could potentially have a ´knock on effect´ in the corporate travel market. However, it is more likely that corporate travellers will avoid visiting Beijing during the Olympic period. China is continuing to experience a wave of expansion in the international hotel industry as large Western hotel operators scramble to establish a recognisable brand presence to encourage brand loyalty when Chinese business travellers stay overseas."

It sounds like in the long run the expansion of Chinese hotel capacity for conventions and meetings may counterbalance and apply the brakes on rate increases in other parts of the world.

Actually, a New York Times story "Shortage of rooms is sending hotel rates through the roof" by David Kaufman demonstrates the direct correlation between available room capacity and room rates, at least in the short run.

"A shortage of rooms is to blame," Kaufman says and presents India as a case in point:

"In India, an increasingly popular tourist destination, hotel room rates are up 48 percent this year nationwide and a whopping 69 percent in its commercial capital of Mumbai, according to a recent Smith Travel report. India has only about 100,000 hotel rooms nationwide, roughly the same number as in New York City, though India has seven or eight times the number of tourists. As a result, hotel rates in India will continue to grow in 2008."

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(PHOTO CREDIT: Wikipedia Public Domain Photo.)