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Holding the Line on Room Rates

Lodging experts advise hoteliers not to give too much in negotiating corporate pricing.

By Carl Cronan | Updated on October 30, 2008

In the hotel business, as in any other, the logical response to a tough economy is to cut prices in order to maintain a steady flow of guests and revenue. Industry experts have their own response to that thought: Don’t do it.

Corporate and convention rate negotiations are currently under way that will set the pace for the room rates charged by owners and operators throughout 2009, which is already perceived as being an off year for hotels. While hotels have had the upper over the last few years, they must now deal with tightening company travel budgets and shrinking conference attendance.

Cutting room rates was the wrong solution when hotel demand fell sharply in the months following Sept. 11, 2001, according to Dan Lesser, senior managing director of the CB Richard Ellis Valuation & Advisory Services Hospitality & Gaming Group in New York City. Although some softening of room rates is anticipated in the coming year, he says it does not have to be as steep as they were seven years ago.

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