By Bjorn Hanson, Ph.D., Clinical Professor
NYU School of Professional Studies
Preston Robert Tisch Center for Hospitality and Tourism
Corporate and contract rate negotiations generally begin during September and continue into December. Corporate and contract rates represent almost 20 percent of occupied U.S. room nights and almost 30 percent of U.S. lodging industry revenue.
The emerging outlook is for corporate contract rates to increase the most since NYU started preparing this forecast, with a national average of 5.5 to 6.5 percent for 2015.
For 2014, average negotiated rates (ADR) increased approximately 4.5 percent, compared with the overall ADR increase for U.S. hotels of about 4.0 percent.
A trend that accelerated in 2012 and 2013 was to charge separately for some services and amenities instead of including these charges in negotiated room rates. In 2010 and 2011, there had been a trend for corporate and contract rates to include services and amenities including internet access, fax charges, use of fitness centers, and breakfasts; that practice is generally being reversed.
Another trend that is continuing is for buyers to reallocate the portfolio of contract rate hotels to include more upscale, select service and limited service hotels in place of upper upscale hotels and full service hotels.
Some corporate travel departments allow travelers to select hotels that are not included in the portfolio of hotels with negotiated rates. This can be especially popular among younger travelers and can have the effect of lowering the overall average rate while increasing travel experience satisfaction.
These estimates are based on selected interviews with industry executives and corporate travel executives, analysis of industry financial data, press releases, and information available on hotel and brand websites.
About the Author
Bjorn Hanson, Ph.D., is clinical professor of the NYU School of Professional Studies (NYU SPS) Preston Robert Tisch Center for Hospitality and Tourism. He is a hospitality and travel researcher, widely respected for his industry forecasts and for having created econometric models that transformed business analysis in the field. Prior to joining NYU SPS, he held the position of global industry leader, hospitality and leisure, at PricewaterhouseCoopers LLP.
Corporate Hotel Rate Negotiations for 2015 – Preliminary Outlook
By Bjorn Hanson, Ph.D., Clinical Professor
About the NYU School of Professional Studies
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