Europe : drastic shrinking of rack rates

A decrease in business demand, promotions on the leisure segment: the drop in prices spread widely due to the major crisis traversed by all European countries. Among the hotel categories, the economy segment was the least effected by this phenomenon. Its domestic character and its offer with a good quality-price value, both with respect to leisure clientele and business travelers, and for some regulars of higher categories, helped contain the slashing of prices. Countries where this segment is well developed like France, Germany, Belgium, Austria and Sweden stand out for their slight increase in rack rates by about 3% on average (*). On the other hand, countries hit particularly hard such as Ireland, the Czech Republic, Hungary and Italy posted rates down by 15% to 30%. In Rome, economy hotels saw their rates adjusted, leaving third place in the ranking of European cities to London, which posted growth by 2.4%. With properties positioned at the top of the segment, Amsterdam and Brussels take the first two positions. Amsterdam is strongly affected by the crisis, the difference between the two capitals is small, dropping from €13 in 2008 to €3 in 2009. Ranking fifth thanks to a large economy supply, Paris demonstrates its ability to offer inexpensive solutions for accommodations alongside its luxury supply. Inversely, the two capitals of the Iberian peninsula -Madrid and Lisbon - have slipped to the bottom of the ranking. In Spain, operators on the economy segment must follow the opportunistic rate strategy of the 3* segment, which expects a drop in rack rates by close to 50% for 2010. Hit full force by the drop in business activities as well as competition from other categories, midscale hotel chains massively lowered prices in order to maintain their occupancy rates. This drop, which was the most significant across...