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Going Up?

Price hikes accompany hotel mergers.

In the hospitality industry, size matters. A record $24.8 billion worth of hotel mergers were consummated last year, and the new megachains raised room rates simultaneously.

Pannel Kerr Forster Consulting (PKF), a San Francisco-based hotel and hospitality consulting firm, reports that the average business travel hotel rate climbed to $105.76 last year, up 7.7 percent from the previous year.

The price hikes are not coincidental. In dense metropolitan areas like Chicago, New York City and San Francisco, the hotel mergers have definitely affected prices, says Robert Mandelbaum, research director at PKF. "The potential is there for aggressive rate growth when many hotels in one area are owned by the same company," he explains.

But it's not all bad news for business travelers. Coopers & Lybrand LLP analyst Bjorn Hanson predicts mergers will benefit business travelers by generating frequent-guest programs that allow them to earn miles at more properties.

Road Notes

By Catharine Brockman Kuchar

  • United Airlines now operates nonstop flights between Boston and San Diego with a new Airbus A320 aircraft. The flights are San Diego's only nonstop service to Boston.
  • The recently opened Crowne Plaza Kingston is the newest hotel development in the Jamaican capital. It features numerous business amenities such as large desks and spacious meeting facilities. Call (800) 227-6963 for reservations.
  • Hilton Hotels Corp. has added the landmark Seelbach Hotel in Louisville, Kentucky, to its roster of franchise properties. Hilton also announced three new airline program partnerships with Hawaiian Airlines, South African Airways and the LatinPass consortium.
  • Thrifty Car Rental has just reopened in Spain, adding franchises in Madrid and Barcelona. By the end of the year, it will cut the ribbon at nine other locations throughout the country, including Malaga, Palma Majorca and Parragona. For information, call (800) FOR-CARS.

Contact Sources

Coopers & Lybrand, (888) CL-HOTEL,

PKF Consulting, 3391 Peachtree Rd., #420, Atlanta, GA 30326, (404) 842-1150

This story appears in the May 1998 issue of Entrepreneur. Subscribe »