Interim Hotel Survey. January June A Hogg Robinson Group Company. Hogg Robinson Group 2015

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1 Interim Hotel Survey January June 2015 Hogg Robinson Group 2015 A Hogg Robinson Group Company

2 HRG Interim Hotel Survey January June Contents Interim Hotel Survey 4 It s been an interesting half year for the hotel business Survey Results 6 The Regions 10 About the HRG Interim Hotel Survey 16 hrgworldwide.com Hogg Robinson Group 2015

3 HRG Interim Hotel Survey January June Interim Hotel Survey January to June 2015 The news that the economy is growing is borne out by the latest HRG The full effects of the slowdown in the oil industry can be witnessed in both Aberdeen and Houston. For the first time in many years hotels in both cities are having to significantly discount room rates to maintain demand Geneva has dropped one place from third to fourth due in part to the removal of the Swiss Franc cap. This is making travel more expensive and so demand is slowing. Corporates are down trading into midmarket hotels Interim Hotel Survey. Now in its 22nd year, the bi-annual survey from the global travel management company, shows an increase in the number of hotel rooms booked by the company in the period January to June 2015 compared to the same period in The survey also shows that for the twelfth year running Moscow remains the most expensive city for business travel, with a 6.07% increase (GBP) in ARR compared to last year. The findings from the latest HRG Interim Hotel Survey also reported that 31 of the top cities experienced an increase in ARR with only 15 cities falling and five remaining static. Convention business continues to have a positive impact on ARR, with Berlin, Boston, Chicago, Frankfurt and San Francisco all posting increases in ARR as a result Both Chennai and Tokyo have enjoyed an increase in corporate demand resulting in rises of 20.9% and 7% respectively Oversupply remains an issue on ARR in Abu Dhabi, Dubai (although to a lesser degree as the city is readying itself for Expo 2020) and Rome Mumbai India s financial and entertainment capital has seen an increase in corporate demand, resulting in a modest increase in ARR. With India forecast to overtake China this year in terms of economic growth, Mumbai along with India s key cities will be ones to watch this year and next Influencers on changes in ARR continue to include oversupply, exchange rate movements, economic and political sanctions Key findings With 12 years in the top spot, Moscow has benefitted from a modest growth in GBP translating into a huge growth locally, due to extreme movements in the exchange rate Mega cities continue to dominate; cities within a region continue to see a large disparity in terms of ARR movement, showing once again that regional performance is diminishing compared to mega city performance Flexibility is going to remain a key differentiator for hotel programmes moving forward. This is again witnessed by the regional charts from the survey with only the Americas showing ARR growth (9.89%). MEWA has seen a dramatic decrease with ARR down by 19.47%. This is caused not only by the ongoing mega city trend but also by more supply in key cities together with a stalling of key feeder markets such as Russia The HRG View: Margaret Bowler, Director Global Hotel Relations Our interim hotel survey is a real barometer for economic growth. We have booked more hotel room nights than last year, illustrating an increase in the number of corporates travelling to do business. It s been an interesting half year for the hotel business. Markets globally are becoming even more fragmented and accommodating not only the ongoing stature of the mega city in the face of the diminishing importance of the region, but also different city trends within the same city. This in-city fragmentation is well illustrated if we look at New York. The Times Square area is seeing a lot of new bed stock which has resulted in a stagnation of ARR whereas in other parts of the city, we continue to see ARR rising. Clearly this can benefit the corporate client who has flexibility to enable their travellers to book in these city areas and benefit from the lower room rates. Flexibility is going to remain a key differentiator for hotel programmes moving forward. Not only in terms of being able to benefit from in-city fragmentation as detailed previously but also in terms of the increase in new bed stock in defined tiers - budget/mid-market limited service, mid-market full service etc. This gives the client greater, wider and deeper choice. With new brands and concepts appearing almost daily, we are seeing many legacy hotel chains fighting for the traditional mid-market. The flexible and canny client can really maximise the results of the interim hotel survey to realise even greater savings on their hotel programmes.

4 HRG Interim Hotel Survey January June Survey Results Top 50 Cities Ranking 2015 Ranking 2014 City 2015 ARR GBP 2014 ARR GBP GBP ARR 2015 ARR Local 2014 ARR Local Local ARR Exchange Rate 1 1 Moscow % RUR 23, RUR 14, % 50.51% 2 5 New York City % USD USD % -8.71% 3 8 San Francisco % USD USD % -8.71% 4 3 Geneva % CHF CHF % -2.97% 5 6 Zurich % CHF CHF % -2.97% 6 9 Hong Kong % HKD 2, HKD 2, % -8.74% 7 2 Lagos % NGN 55, NGN 59, % 10.61% 8 14 Sydney % AUD AUD % 6.67% 9 4 Paris % EUR EUR % 12.09% 10 7 Rio De Janeiro % BRL BRL % 18.09% Washington % USD USD % -8.71% Tokyo % JPY 31, JPY 27, % 7.13% Miami % USD USD % -8.71% Basel % CHF CHF % -2.97% London % GBP GBP % 0.00% Dubai % AED AED % -5.81% Seoul % KRW 273, KRW 266, % -4.29% Singapore % SGD SGD % -2.29% Stockholm % SEK 1, SEK 1, % 16.94% Copenhagen % DKK 1, DKK 1, % 11.97% Oslo % NOK 1, NOK 1, % 17.08% Frankfurt % EUR EUR % 12.09% Sao Paulo % BRL BRL % 18.09% Houston % USD USD % -8.71% Nairobi % KES 20, KES 20, % -1.51% Ranking 2015 Ranking 2014 City 2015 ARR GBP 2014 ARR GBP GBP ARR 2015 ARR Local 2014 ARR Local Local ARR Exchange Rate Milan % EUR EUR % 12.09% Shanghai % CNY 1, CNY 1, % -9.12% Beijing % CNY 1, CNY 1, % -9.12% Amsterdam % EUR EUR % 12.09% New Delhi % INR 12, INR 12, % -5.48% Athens % EUR EUR % 12.09% Brussels % EUR EUR % 12.09% Philadelphia % USD USD % -8.71% Toronto % CAD CAD % 2.74% Barcelona % EUR EUR % 12.09% Istanbul % TRL TRL % 8.21% Aberdeen % GBP GBP % 0.00% Mumbai % INR 11, INR 11, % -5.48% Cape Town % SAR 2, SAR 2, % 1.73% Rome % EUR EUR % 12.09% Johannesburg % SAR 2, SAR 2, % 1.73% Dusseldorf % EUR EUR % 12.09% Abu Dhabi % AED AED % -5.81% Pittsburgh % USD USD % -8.71% Hamburg % EUR EUR % 12.09% Munich % EUR EUR % 12.09% Berlin % EUR EUR % 12.09% Madrid % EUR EUR % 12.09% Chennai % INR 9, INR 8, % -5.48% Bangalore % INR 9, INR 10, % -5.48%

5 HRG Interim Hotel Survey January June The top 5 biggest rate increases The top 5 biggest rate decreases City 2015 ARR Local 2014 ARR Local Local ARR Exchange Rate City 2015 ARR Local 2014 ARR Local Local ARR Exchange Rate MOSCOW RUR 23, RUR 14, % 50.51% SYDNEY AUD AUD % 6.67% TOKYO JPY 31, JPY 27, % 7.13% CHENNAI INR 9, INR 8, % -5.48% SAO PAULO BRL BRL % 18.09% ROME EUR EUR % 12.09% ABERDEEN GBP GBP % 0.00% GENEVA CHF CHF % -2.97% ABU DHABI AED AED % -5.81% HOUSTON USD USD % -8.71% Moscow stubbornly refuses to relinquish its top spot, now into its 12th year. A modest growth in GBP has been translated into a huge growth locally due to the significant movement seen in exchange rate. Sydney benefitted from increased demand across the peak summer season which, coupled with the world cup cricket, major sporting events and concerts often saw city hotels fully sold out - pushing up average rates. Tokyo saw a modest 7% rise in GBP mirrored by a 7%+ movement in exchange rate resulting in a 14.6% rise locally driven by ever increasing corporate demand. Chennai has seen robust growth in average rate, even with an exchange rate working against it. After several tough years, corporate demand is returning, which combined with no significant new hotel openings recently has lead to the rate growth seen. Sao Paulo s rate raise locally has been driven by a large exchange rate movement. In GBP there is a modest decrease as the city feels the effects of oversupply following the world cup. Rome continues to see the effect of new bedrooms opening on top of a weak economy which means falling demand and increased supply has resulted in significant drop in ARR locally. Aberdeen is now feeling the full effects of the slowdown in the oil industry and demand significantly less with too many hotel rooms to fill. For the first time in many years hotels are having to discount rates to maintain demand and this is being reflected in the city s average room rate and in hotel negotiations for 2015/16. Geneva is facing a challenge with the removal of the Swiss Franc cap which in turn is making travel more expensive and so demand is slowing resulting in a modest fall in average rate, intensified by exchange rate movements. Abu Dhabi is also feeling the effects of oversupply pulling down the average room rate. Houston like Aberdeen is experiencing the effects of the turn down in the oil industry with hotels having to discount rates to maintain demand. However a small increase in GBP was offset by the backwards movement in exchange rate. Moscow stubbornly refuses to relinquish its top spot, now into its 12th year.

6 HRG Interim Hotel Survey January June The Regions The America s is the only region to have seen growth during this period, as it was last year as well. Once again cities within each region continue to see a large disparity in terms of ARR movement, further evidence that regional performance is becoming less dominant compared to mega city performance. Chicago has seen a city wide upsurge in convention business. This has enabled hotels to drive rates up, resulting in an increase in ARR. San Francisco continues to be a strong destination for conventions and corporates - no new openings again led to a robust growth in average rate. Vancouver has seen a record first half year driven by high demand from all sectors which along with no new openings has seen prices rise substantially. Montreal saw a marginal decline in supply along with extra demand from the FIFA women s world cup drive a modest increase in average rate. North America City ARR Local 15 ARR Local 14 Local Var Exc Rate Var NEW YORK CITY USD USD % -8.71% WASHINGTON DC USD USD % -8.71% HOUSTON USD USD % -8.71% BOSTON USD USD % -8.71% CHICAGO USD USD % -8.71% SAN FRANCISCO USD USD % -8.71% PHILADELPHIA USD USD % -8.71% LOS ANGELES USD USD % -8.71% VANCOUVER CAD CAD % 2.74% TORONTO CAD CAD % 2.74% OTTAWA CAD CAD % 2.74% MONTREAL CAD CAD % 2.74% New York City saw good growth in average rate in GBP. It will be interesting to see if the new product makes an impact on ARR as we move into the second half of the year. Following a year full of convention business in 2014, Washington DC saw a modest decline in GBP ARR during the period with less convention business to push up rates. However government business is filling the majority of the gap, and the decline in GBP was bought into sharper focus locally due to the movement in exchange rate. Houston like Aberdeen is feeling the effects of the turn down in the oil industry with hotels having to discount rate to maintain demand. A small increase in GBP was offset by the backwards movement in the exchange rate. Boston has seen a strong first half with a busy graduation season coinciding with city wide convention business. This together with new international flights into Logan, supply has struggled to cope with demand and so there has been high growth in ARR. Europe City ARR Local 15 ARR Local 14 Local Var Exc Rate Var MOSCOW RUR 23, RUR 14, % 50.51% HAMBURG EUR EUR % 12.09% GENEVA CHF CHF % -2.97% BARCELONA EUR EUR % 12.09% FRANKFURT EUR EUR % 12.09% PARIS EUR EUR % 12.09% BRUSSELS EUR EUR % 12.09% DUBLIN EUR EUR % 12.09% VIENNA EUR EUR % 12.09% ATEHNS EUR EUR % 12.09% MADRID EUR EUR % 12.09% BERLIN EUR EUR % 12.09% Moscow continues to be the most expensive city for business travel, and with the sanction regime against it, the city saw a large increase in rate driven mainly by variation in the exchange rate. Frankfurt is now into its busy convention and fair season with this year seeing the return of some big events that take place every two years; demand outstrips supply during these events pushing rates up. Paris has seen new bedrooms opening and a slightly weaker convention season helping to drive the modest fall in average room rate. Dublin has seen compression in the market even with many refurbishments back on line driven by the economy getting back on track. Madrid is experiencing the economy coming back from a low base with the upscale hotels seeing more demand driven by local business.

7 HRG Interim Hotel Survey January June Berlin continues to see a lack of supply coupled with high demand driven by a good convention season as more large events move here from higher priced cities in Germany. Bangalore was more or less flat as new bed stock fills, the local drop being driven entirely by exchange rate movements. Geneva saw a modest fall in average rate caused by corporate clients down trading into mid-market hotels, this was exacerbated by the exchange rate movement. Asia Pacific Mumbai is India s financial and entertainment capital and has seen modest average rate growth even with the exchange rate working against it. As corporate demand builds all the new bed stock of the last few years is finally starting to fill, and with India forecast to overtake China this year in terms of economic growth, all the key Indian cities will be ones to watch throughout the remainder of this year and into City ARR Local 15 ARR Local 14 Local Var Exc Rate Var HONG KONG HKD 2, HKD 2, % -8.74% SINGAPORE SGD SGD % -2.29% TOKYO JPY 31, JPY 27, % 7.13% NEW DELHI INR 12, INR 12, % -5.48% Beijing saw a modest increase in rate in GBP but again this was reversed due to exchange rate movements locally. Shanghai like Beijing saw a good growth in rate in GBP due to increased corporate demand from both international and domestic markets, but again this was reversed due to exchange rate movements locally. MUMBAI INR 11, INR 11, % -5.48% BANGALORE INR 9, INR 10, % -5.48% HYDERABAD INR 8, INR 8, % -5.48% BEIJING CNY 1, CNY 1, % -9.12% SHANGHAI CNY 1, CNY 1, % -9.12% SYDNEY AUD AUD % 6.67% Middle East, West Africa City ARR Local 13 ARR Local 14 Local Var Exc Rate Var DUBAI AED AED % -5.81% ABU DHABI AED AED % -5.81% MANAMA BHD BHD % -8.66% Sydney benefitted from increased leisure demand across their peak summer season coupled with the world cup cricket and other major sporting events and concerts that often saw the city full, so pushing up ARR. ISTANBUL TRL TRL % 8.21% CAIRO EGP 1, EGP 1, % -1.55% DOHA QAR QAR % -8.62% Tokyo saw a modest 7% rise in GBP couple with a 7%+ movement in exchange rate resulting in a 14.6% rise locally driven by ever increasing corporate demand. Dubai has seen a small fall in average rate as more supply comes online in readiness for the world expo in In addition the traditional role for the city as a hub in the region is lessening as travellers now ideally travel point to point direct to their final destination. Abu Dhabi is experiencing the effects of oversupply pulling down ARR. Manama has seen government intervention in the hotel industry with rates being set at a national level and hotels having no or little room to negotiate. Cairo has seen rates rise albeit from a very low base last year as the city recovers from the political turmoil and as business demand grows.

8 HRG Interim Hotel Survey January June The UK City ARR GBP 15 ARR GBP 14 GBP Variance LONDON GBP GBP % ABERDEEN GBP GBP % HEATHROW GBP GBP % MANCHESTER GBP GBP % NEWCASTLE GBP GBP % EDINBURGH GBP GBP % GLASGOW GBP GBP % BELFAST GBP GBP % The flexible and canny client can really maximise the results of the interim hotel survey to realise even greater savings on their hotel programmes. LIVERPOOL GBP GBP % CARDIFF GBP GBP % Aberdeen is now feeling the full effects of the slowdown in the oil industry demand has dropped while supply remains at high levels. For the first time in many years hotels are having to significantly discount rates to maintain demand. This is being reflected in the city s average room rate and in hotel negotiations for 2015/16. London on the face of it remains fairly flat for the first six months. However, when looking in more detail we can see that the high end properties have taken a larger decrease in ARR, as the budget and mid-market hotels see modest increase in their average rates. Manchester has seen a combination of growing corporate demand and few new rooms opening which has helped drive a modest growth in average rate across the city. London by region Hammersmith & Kensington % City % West End & Central % Docklands %

9 HRG Interim Hotel Survey January June About the HRG Interim Hotel Survey Now in its 22nd year, HRG s biannual hotel survey looks at hotel room rates for key business destinations across the world to provide a dynamic insight into global business travel behaviours. For more information please contact: Margaret Bowler E margaret.bowler@hrgworldwide.com T +44 (0)

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