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Hotel Industry News |
Saturday September 6th, 2008 |
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Hotels Renegotiating Rates to Preserve Corporate Business |
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The lodging industry's top players said they have altered their outlook for revenue trends for the rest of 2008, potentially resulting in a shift in the corporate buyer's favor during the next round of rate negotiations. |
As many hotel suppliers see softer demand, travel buyers at some big companies have said hotels are more willing to renegotiate corporate rates mid-year, which treads against typical negotiation patterns.
Morgan Stanley last week downgraded its stock rating on Marriott International Inc., suggesting that lodging trends are "worse than perceived." Due to an expected decrease in corporate bookings, the firm's analyst Celeste Brown in a research note wrote that it might be more difficult for the lodging industry to weather current economic conditions without corporations as a crutch.
"While we believe the financial sector corporate rate renegotiations are well-understood, neither the renegotiations from other sectors nor the increased group cancellations [and] pressure on the group rates are well-known by the market," Brown wrote. "The corporate rate renegotiations are themselves extraordinary, the last time rates were re-cut mid-year was in 2001 and rates will again be negotiated for 2009. We also expect companies to reduce total trips by employees due to rising airfares, resulting in lower corporate transient demand and lower attendance at events that are not canceled."
Marriott chairman and CEO J.W. Marriott Jr. agreed, saying "businesses are cutting back," adding that upcoming corporate rate negotiations will be challenging for the hotel company, according to Reuters.
External Source - For the complete article click here
Source - The Transnational
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