Travel budget decline sparks increase in cheap deals

Travel budget decline sparks increase in cheap deals

Cost conscious travellers looking for budget holidays can expect hotel prices to come down as the travel industry tightens its belt in gloomy economic conditions.

What’s more, customers won’t have to hunt around for last minute deals to save money; hoteliers across the board will be competing for fewer customers which should mean cheap hotels for all.

A recent study from American Express showed that over 70 per cent of companies were cutting back on travel budgets for 2009 in light of the current economic climate.

According to, an average reduction of 12 per cent is expected which will mean fewer rooms are being occupied.

In the same survey, 60 per cent of companies revealed that they were turning to alternatives such as videoconferencing in order to reduce their travel spending habits. The findings were backed by another review from business consultants, Deloitte.

Deloitte’s spokesperson, Alex Kyriakidis, hinted at falling prices as hoteliers struggle to survive. The situation is going to become fiercely competitive in a dog-eat-dog world; Mr Kyriakidis said: “There will be cannibalism across the segments as consumers become more budget conscious.”

In Deloitte’s Hospitality Vision report, the company highlighted key performance markers were down for the hotel industry across Europe in the year to September 2008. The revenue per available room (revPAR) dropped to ?76 a decrease of 1.5 per cent.

The other performance indicator which was down was room occupancy percentages. The occupancy of rooms in European hotels had fallen by 1.9 per cent to a rather dismal 67.8 per cent. Results have not been this bad since 2003, when confidence was shaken by the ongoing conflict in Iraq.

The report said that August was a pivotal month for the industry, which had a shocking knock-on effect for following months. September figures showed a drop of revPAR across Europe of 6.7 per cent. Room prices remained steady, but a price fall is inevitable.

Some of Europe’s most popular city break destinations were stricken in the last quarter with declining revenue and custom. Hotels in Amsterdam, Rome and Barcelona were all severely affected.

In order for business to pick up again, hotels will need to drop prices to encourage customers. “The hotel operators will be focusing on value for money more than ever before,” Mr Kyriakidis added.

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