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April 16, 2008

Global hotel market proves resilient during economic uncertainty

Despite difficult market conditions and ongoing concerns over the global credit crunch, Hogg Robinson Group (HRG)’s full year hotel survey reports strong rate growth in 2007 across key global cities.

Reflecting the increasing importance of the emerging economies, Moscow was highlighted as the most expensive destination worldwide for the third consecutive year, with the Russian capital posting a staggering 93% rise in average hotel rates since 2004.

Other trends noted by the international corporate services include mixed results for the US market, in part due to weak dollar exchange rate and economic concerns, particularly in the last quarter. New York retained its position as the second most expensive city worldwide.

The UK market, meanwhile, was a consistent performer, with most cities showing a steady growth. Interestingly, this trend was seen in all international markets outside the US. Furthermore, India continues to exhibit exceptional growth potential with its financial capital Mumbai achieving a 37% average room rate increase – the highest of any         city surveyed

On the facilities side, the report noted that some companies are adding serviced apartments to their accommodation mix as an option for long stays, with the average length of stay standing at 7.25 nights in 2007

Another key finding was that the role of the international corporate services provider becomes ever more valuable as companies look to maximise their return on expenditure and control costs during times of economic uncertainty.

“The hotel industry has shown a strong performance throughout 2007,” said Margaret Bowler, director global hotel relations at HRG. “Although not to the levels of 2006 with many key cities achieving single as opposed to double digit growth.”

The strength of the British Pound has clearly benefited UK corporates when travelling to certain overseas markets over the last 12 months, helping to cushion the impact of significant local currency room rate rises. For example, a substantial 24% local currency rate rise in Johannesburg equates to a more affordable 10% when converted to GBP.

Only five of the 50 cities surveyed for the global average room rate listing recorded a decline in rates in 2007, largely attributable to maturing local markets or a significant increase in room capacity and availability: rates in Bangalore and Philadelphia decreased by 5%, Tokyo and Bristol were down 2% and Liverpool fell by just 1%.

HRG’s full year survey is based on a combination of industry intelligence, actual room nights booked and rates paid by its UK clients during January to December 2007 compared to the same period in 2006.

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