European Hotel Costs Hard to Swallow

15th Jul 2003

According to Jones Lang LaSalle Hotels, a room in one of London`s hotels is more than twice as expensive as a room in Sydney, Toronto, or San Francisco for local residents. These are the findings of the firm`s inaugural Hotel Affordability Index, which reveals that the location of the most expensive hotel rooms across the globe reads like the itinerary of David Beckham`s latest European shopping trip - London, Paris and Milan.

Jones Lang LaSalle Hotels` Hotel Affordability Index compares the average daily rate (ADR) of a city`s hotel market with the cost of a Big Mac in that city in local currency, as published by The Economist magazine. For example, using The Economist`s Big Mac index as the pricing measure, in London a good nights sleep will cost a traveller 110 times more than the cost of a hamburger, with all the trimmings, from the local MacDonald`s. At the other end of the scale, people from Atlanta and Dallas can stay at a hotel for only 29 times the cost of their hamburgers.

“In light of the outbreak of SARS, war in Iraq and the ongoing threat of terrorism, it is likely hotels will be increasingly reliant on domestic demand. The global Hotel Affordability Index provides a key measure as to the affordability of accommodation for local guests in the cities covered. A high ranking highlights the city as an investment hotspot, while also indicating a greater likelihood of achieving a high selling price”, said Nick Marsh, CEO Europe, Jones Lang LaSalle Hotels.

Europe in particular has enjoyed growth in the number of domestic visitors who have opted out of the long-haul option, choosing instead to holiday in their own back yard, fuelled by the cheaper cost of travel provided by the budget airlines. This poses the interesting question as to whether European hamburger joints will consider increasing the cost of their Big Mac`s, to bring them more in line with the cost of a hotel room in the city.

In general, it is the more international cities that achieve the highest room rates. For instance, international bed-nights constitute over 65% of total demand in London, Paris, Prague and Amsterdam, compared to 57% in Sydney according to Jones Lang LaSalle Hotels. International cities benefit from high corporate and leisure hotel demand due to their status as centres of economic and cultural activity, as well as being international transport hubs, and the home of a McDonald`s on every corner! Hong Kong and New York, the top two non-European cities to do most damage to your wallet, do however manage to buck this trend with international tourists accounting for a mere 16% and 16.6% respectively of total bed nights in 2002.


In contrast, hotels in the Asia Pacific region and the United States provide good value, costing in most instances between 30 and 40 times the cost of a Big Mac, resulting in some real bargains for domestic travellers.

Jones Lang LaSalle Hotels is the world`s leading hotel investment services group. Through its 18 dedicated offices and the Jones Lang LaSalle network of over 7,000 professionals in more than 100 key markets, Jones Lang LaSalle Hotels is able to provide clients with value added investment opportunities and advice.

Jones Lang LaSalle Hotels recent track record for the last two years included the sale of 13,994 hotel rooms to the value of US$1.4 billion in 48 cities and advisory expertise for 173,021 rooms valued at US$32.6 billion
across 343 cities.

Jones Lang LaSalle Hotels` services include transactions, mergers and acquisitions, financial advice and capital raising, valuation and appraisal, asset management, strategic planning, operator assessment and selection and industry research.



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