According to the hotels.com® Hotel Price Index™ (HPI®), business travel to many of the world’s economic hotspots increased in the first half of 2011, with hotel prices in many top business capitals rising year-over-year. These findings are consistent with the Global Business Travel Association’s projection that worldwide business travel spending will rise 9.2 per cent in 2011. However, while the average price of a hotel room around the world rose 3 per cent, many major business cities watched hotel prices drop due to natural disasters and unforeseeable political revolutions.

The hotels.com Hotel Price Index (HPI) is a regular survey of hotel prices in major city destinations across the world. The HPI is based on actual bookings made on hotels.com and Canadian prices shown are those paid by Canadian customers (rather than advertised rates) for the first half of 2011. The report largely compares prices paid in 2010 with prices paid in 2011.

“We have been following the rebound of business travel closely, and were pleasantly surprised by the findings of our most recent Hotel Price Index,” said Victor Owens, vice president of marketing North America for Hotels.com. “Prices in major business and convention cities, including New York, Chicago, London, Paris and Beijing increased year-over-year, confirming research that indicates business travel is rebounding.”

Last year’s Hotel Price Index found Asian cities to be gaining popularity among business travellers, a trend that is continuing. Average prices for hotel rooms throughout Asia fell by 6 per cent from the first half of 2010 to the first half of 2011, however individual markets in the region increased dramatically. Hotel prices in Singapore increased 8 per cent year-over-year, and room rates in Hong Kong jumped 16 per cent, from an average of $123 per night in 2010 to $142 in 2011.

Another part of the world that has attracted business travellers in recent years is the Middle East. However, this year’s political and social unrest related to the Arab Spring had a significant negative impact on countries in the Middle East and beyond. Falling prices were seen throughout the region, even in areas not directly involved with the uprising. Average hotel room prices in Dubai, the golden city of the United Arab Emirates once touted for great promise in both the business and leisure sectors, fell slightly by 4 per cent. Unsurprisingly, prices fell by 18 per cent in Egypt, a city closely associated with the revolution.

Natural disasters also had a damaging effect on major business capitals. In Japan, prices dropped across the country due to the March 11 earthquake and resulting tsunami that devastated the region. Tokyo, saw its prices fall 9 per cent to $137 from $152 the previous year.

When analyzing fluctuations in hotel room prices, one important factor to consider is hotel development. As demand for hotels has increased, so has supply, which acts as a brake on prices. According to the July 2011 STR Global Construction Pipeline Report, there are still nearly 6,000 new hotel projects in development around the world, adding more than 900,000 hotel rooms. Monitoring hotel development can help explain shifts in prices, especially in cities where business travel continues to rebound.