City hotel rates slump

Hotel rates in the world's 10 most expensive cities fell up to 23% last year, figures compiled by Hogg Robinson show.

The business travel giant's annual Hotel Survey identifies New York as the biggest loser last year, with average rates falling from $414 a night to $319.

However, the decrease was offset by sterling's weakness, which meant average prices in pounds fell only £20 a night to £203.

New York dropped from being second most expensive city to third, behind Abu Dhabi and Moscow.

The Russian capital maintained its title as most expensive for the fifth consecutive year despite a 5% reduction in local prices. Margaret Bowler, HRG global hotel relations director, said: "It is the first time corporates have ever known Moscow hotels to negotiate.

A lot is down to the finance sector that was not travelling."

Abu Dhabi, which was fifth-most expensive in 2008, is suffering a lack of supply, but Bowler said this could be short-lived.

"Abu Dhabi has a lot of new rooms going in, so everyone expects it to follow Dubai - there were so many hotel openings there that at one stage, there were 70 under construction. In the last year, Abu Dhabi has had 1,600 new rooms, that will impact," she said.

Dubai's predicament saw it fall from tenth to 16th place in HRG's survey.

Other big losers last year were Paris, Milan, Geneva and Washington, all of which saw double digit rate decreases.

Bowler said that despite the fall in local prices, sterling's weakness meant that rooms had often been more expensive for UK buyers year on year when currency was converted.

Rates also fell sharply in the UK. Average London prices fell 5% to £151.

Aberdeen saw an 11% fall. "We have never seen rates fall back in Aberdeen, but there have been considerable new openings," said Bowler.

She added that Liverpool, which saw rates drop 15%, was also suffering from over-supply of new properties, while Heathrow's new openings had brought average prices down 5% to £101. Bowler said the outlook was cautiously optimistic. "For 2010, on the whole, rates are flat, hotels are being pretty sensible," she said.

Top Ten Most Expensive Cities (Last year's position in brackets)

1.      Moscow (1)

2.      Abu Dhabi (5)

3.      New York (2)

4.      Paris (3)

5.      Manama (Bahrain) (20)

6.      Milan (6)

7.      Geneva (7)

8.      Copenhagen (12)

9.      Washington (19)

10.     Athens (17)