Hotel pricing metric is on its way down

Consultant see flat-to-down room rates in 2010

Susan Avery -- Purchasing, 7/1/2009 2:00:24 PM

Average daily rate (ADR), a key hotel pricing metric continues to drop, says Neysa Silver, director of hotel consulting at CWT Solutions Group, pointing out that in a month's time, ADR fell 4.6% from $113.70 in March to $108.71 in April.

Silver has been working with travel buyers to ensure that their rates are competitive based on market conditions. She calls these market softening renegotiations.

"We take a look at their top markets and what the market is doing compared to what it did a quarter or two past," she says. "Then, we reach out to the suppliers and present the buyer's initiatives. Opening up negotiations is not just about reducing rates, although that's part of it. It's that companies are undergoing budget cuts and they want to keep traveling. We are helping them to spend less."

Concerned about rate integrity-whether they'll be able to raise rates once the economy improves-the hoteliers, in many cases, come back with promotional rates, she says.

Looking ahead to 2010, Silver expects rates to remain flat or show some marginal decreases.

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