Is the long-running hotel seller's market finally over?

It all depends, says Bjorn Hanson, clinical associate professor at New York University's Tisch Center for Hospitality, Tourism, and Sports Management, and former hospitality and leisure group principal for PricewaterhouseCoopers. “It's certainly much more of a buyer's market than we've seen since 2003 or 2004,” Hanson says. “But it's complicated. Markets like New York still have occupancy rates over 80 percent, which means close to 100 percent during midweek. So it's still a seller's market there.”

Jan Freitag, vice president for global development at Smith Travel Research, agrees. “The top 10 markets are still going to see a seller's market,” Freitag says. “These big cities haven't seen a real dent in demand.” Secondary markets, however, particularly those with a lot of new properties still coming on line, will give buyers “easier negotiating opportunities.”

Second-quarter numbers were “slightly weaker than anticipated,” says Hanson, but observers need to remember that once autumn arrives, the hospitality industry begins to rely more on business travelers than leisure travelers. “And business travel has held up surprising well — better than expected,” he says.

While companies are trying to reduce travel, “much of the discretionary travel for business has already been eliminated,” Hanson says. “Business has already reacted to the cost of travel. For larger meetings, they're sending fewer attendees for fewer days — for example, 15 employees to a convention rather than 20, with just some of them attending each day.”

While the situation may be complex for planners looking to negotiate better deals, Freitag says there are opportunities out there for planners beyond room rates. “I think there's an opportunity to negotiate up,” he says, and ask to incorporate auxiliary services in the room rate.

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