Industry Update
External Article29 October 2018

NYU Analysis Outlines Differing Perspectives for 2019 Rate Negotiations

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With the hotel sourcing season for 2019 corporate negotiated rates well underway, it's expected that U.S. corporate rates will increase between 2.5 percent and 3.5 percent next year, according to an analysis from New York University's Bjorn Hanson.

Hanson, an industry consultant and adjunct professor at the New York University School of Professional Studies Jonathan M. Tisch Center for Hospitality and Tourism, said both buyers and sellers went into this negotiation season from perceived positions of strength. Hotels entered with expectations of increases in the 4 percent to 5.5 percent range and corporates entered expecting increases of 1.5 percent to 2 percent.

For hoteliers, occupancy is the highest it's been since the early 1980s. Though they've struggled to leverage that to drive significant rate growth in recent years, average daily rate is increasing more in 2018 than it did in 2017, between 2.5 percent and 3 percent this year, and that trend is expected to continue in 2019. Group demand, Hanson notes, has already increased more this year than previously forecast.

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