The hotel industry recovery might be spotty, but the overall rate picture for much of the world is showing signs of improvement.

Average daily rate in the Americas region is up 3.8% year-through-July when reported in U.S. dollars, according to STR Global, sister company of HotelNewsNow.com. In Europe, rates are up 4.1% when measured in euros, while the Asia/Pacific region has reported a 4.2% increase, also in euros.

The Middle East/Africa region, which has endured a volatile political climate during the first part of the year, is down 2.5% when reported in euros, according to STR Global, sister company of HotelNewsNow.com. 

As the world’s regional economies have improved, so too have their hotel markets, said Konstanze Auernheimer, director of marketing and analysis for STR Global.

“As most businesses have pretty healthy balance sheets, business travel has come back since 2010, which as well contributed to the ADR increase,” she said.

Adam Weissenberg, vice chairman of Deloitte LLP's Tourism, Hospitality and Leisure practice, shared a similar sentiment: “The increase in business travel is the major factor in ADR increase.”

But will that momentum last?

“Within the current economic environment, it is very difficult to make a judgment if this ADR growth will continue,” Auernheimer said. “We are still predicting at the moment that we should see, albeit smaller, growth rates for next year, but this could all change quite quickly depending what happens to GDP, consumer confidence, etc.”

“As a whole, we will continue to see moderate ADR growth,” said Kristi White, director of demand and distribution marketing for TravelClick. “Most markets are focusing more on occupancy growth as it relates to ADR growth than what their competitive set is doing. This should stabilize ADR fluctuations. Additionally, if hotels can capitalize on increases in occupancy, they will go into RFP season in a stronger position than in 2011 and will continue to see ADR growth.”

What follows is a breakdown of ADR performance in each of the four world regions:

(Note: Given the weakening value U.S. dollar against most currencies, the Americas region is the only regional data to be analyzed in dollar terms. The remaining three regions are analyzed in euros. Markets are analyzed in local currencies.) 

The Americas region has posted slow but steady gains in ADR when reported in U.S. dollars. Through July of this year, the metric is up 3.8% to US$103.87.

During July, the most recent month for which STR Global performance data is available, ADR was up 4.5% to US$105.68.

“In the Americas, we are finally seeing rates growing higher than occupancy in July 2011,” White said. “Often what holds rate growth back is a symptom of what happened nine to 12 months ago with group and/or negotiated pricing. As hotels are getting more aggressive with their transient rate, they are able to price group and negotiated business more aggressively. This helps to drive ADR up.”

Through July, three key markets have posted double-digit gains in ADR when reported in local currency:
• Sao Paulo +17.4%
• San Francisco +14%
• Buenos Aires, Argentina +13.6%

Sao Paulo in particular stands out in light of its stable occupancy growth, White said.

“Occupancy growth is stable at 5.6% (year-to-date July),” she said. “However, ADR growth is three times that at over 17%. This market is capitalizing on the popularity of Brazil as a whole in the lead up to two world events (the FIFA World Cup and Summer Olympics). ADR growth has been in the double- digit range for the last 18 months with no sign of abating.”

As for future growth, Weissenberg said, “We will still have moderate growth, unless we have an economic dip, in which case, it will start to flatten for the U.S.” 


The Asia/Pacific region recorded a 4.2% increase in ADR to €98.64 year to date through July.

During July the region was up 3.2% to €97.15.

“The Asia/Pacific region has the ability to be more aggressive with rates because of a different mix of hotels and owners,” White said. “Additionally, the region is recognizing that fluctuations in occupancy are at the local market level and discounting can’t fix that, enabling them to hold rates more effectively.”

Through July, four key markets have posted double-digit gains in ADR when reported in local currency:
• Hong Kong +25.4%
• Bali, Indonesia +11.6%
• Jakarta, Indonesia +12.5%
• Seoul, South Korea +10.6% 

Europe reported a 4.1% increase in ADR to €100.06 year to date through July.

The region saw the metric go up 3.1% to €102.97 during July.

“Europe is one region where we are beginning to see rates soften from the earlier part of the year,” White said. “This is unfortunate as occupancy growth is remaining fairly consistent. The region is not responding to occupancy growth as aggressively as it has in the past.”

“Europe still struggles but certain markets, for example Germany and London, are strong,” Weissenberg said.

Through July, five key markets have posted double-digit gains in ADR when reported in local currency:
• Istanbul +32.7%
• Dusseldorf, Germany +16.7%
• Venice +16%
• Paris +14.1%
• Amsterdam +13.3%
• London +11.4%

London has been able to push rate in the build-up to the Olympics, White said.

“Occupancy performance has been relatively flat (0.4% growth YTD July), however, rate is up over 11% (when reported in pounds),” she said. “This market is pushing rate higher in preparation for the Olympics. Having higher transient rates allows hotels to have more pricing power for group and negotiated business. This will serve them well as they step into the Olympic season.” 

Through July, the Middle East/Africa region posted a 2.5% decrease to €113.78.

The region reported a 10.2% drop to €97.21 during the month of July.

“The (Middle East/Africa) region was doing much better at holding rate early in the year,” White said. “However, in the last few months, rate is declining, as is occupancy. The decrease in occupancy is a market condition and discounting is not going to resolve that.”

Through July, five key markets have posted double-digit declines in ADR when reported in local currency:
• Sandton, South Africa and Surroundings -29.4%
• Abu Dhabi -19.1%
• Cape Town, South Africa -15.6%
• Beirut, Lebanon -12.2%

A notable market on the plus side of ADR gains is Cairo, White said.

“Even with 46% occupancy decline, the market is still up year to date in ADR by 2%,” she said. “This is a market that recognizes they can’t do anything about what is happening to it and is holding steady on rate.”