Global hotel prices rise 15% in 2006

28th Mar 2007

Hotel prices rose by 15% across the world between the fourth quarter of 2005 and the fourth quarter of 2006, according to the Hotel Price Index.

The overall rise was driven to a large extent by European destinations, where prices rose by 17% in the same period, as travellers made more trips during the off-peak October, November and December months.

This drove prices up across the continent’s major city destinations including London, where prices rose 22% in 2006.  Prices in the US (up 11% Q405-Q406) and Asia (up 12% Q405-Q406) also increased.

The HPI is based on prices for 20,000 hotels across 1,000 locations around the world and on the actual prices paid by customers, rather than simply advertised rates.

Patrik Oqvist, marketing director of, comments: “Changes to European travel habits, including more off-peak-season city-hopping, drove demand in the later months of 2006 and this, in turn, was a significant driver of price increases globally.


“Q4 2006 also saw a weaker US dollar. European tourists took advantage of the cheaper shopping on offer and the high demand drove up hotel prices.”

The price of a bed for the night around the world

Moscow retained its position as the city in which tourists paid the most for a room - at an average of £172 per night in Q4 2006.  At the other end of the scale, travellers would get four nights in Bangkok for virtually the same price - the average room set tourists back just £44, making it the cheapest major destination.

New York (£155) and Dubai (£124) - destinations where travellers often spend more for a higher-end hotel - trailed Moscow in second and third place in the table.  A resurgent Cancun - which continues to grow in popularity as a winter-sun destination for US and European travellers alike - was the fourth most expensive global destination.

Shanghai and Bali - two very different destinations - both featured in the list of bargain destinations, with room prices at just £61 and £63 per night.  The HPI suggests destinations in the Far East could mount a challenge to short-haul destinations - even with the higher air fares, a two-week break in Bali could be cheaper than a trip to the South of France.

Tallinn and Warsaw were the cheapest European cities amongst those reported, although this reflects the seasonality of these destinations, where demand falls over the winter months.
Patrik Oqvist says: “By selecting destinations at the bottom of the table, canny travellers can get themselves three or four night stay for the same price as one night at a hotel in destinations at the top of the table.  With the internet making it so easy for travellers to quickly compare room rates, we expect hotel choice to become the driver of destination decisions, rather than the cost and availability of flights, which has historically driven consumer demand.“Fastest risers

With room prices averaging just £44 per night, Bangkok was the cheapest of the world’s major city destinations. However, the city also showed the highest average price rise year-on-year, at 58%. If prices in Bangkok continue to rise at this rate, as quality hotels make up a higher proportion of total bookings, its crown as the world’s best-value long-haul city destination will be under threat from up-and-coming Shanghai (for city breaks) and Bali (for beaches).

Bucking the overall trend, a few cities did post year-on-year price falls in Q4 2006.  Compared to the same period in 2005, Guangzhou in China showed the greatest fall, with prices down 16% overall. This may reflect the continued growth of Beijing and Shanghai as China’s hub cities and suggests that travellers are not leaving the major cities to visit the provinces.

Patrik Oqvist concludes: “Travel habits are changing extremely quickly - driven by the new opportunities that cheaper air travel has opened up.

“We believe that the traditional city destinations will maintain their position - however, some of the newer destinations are being supplanted by near-by rivals: Warsaw and Prague by Dubrovnik, Dubai by Doha and Abu Dhabi, for example.

“With the enormous range of bargain hotel rooms in the rising destinations, there has never been a better time to explore off the beaten trail.”


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