It looks like the combination of increased travel and very few hotel rooms being built are going to contribute to a significant increase in the cost of hotel rooms in the United States in 2006. It is amazing how cyclical the price of hotel rooms and airline tickets are. They are the true examples of the laws of supply and demand.
PricewaterhouseCoopers, the consulting firm, predicts that the average daily hotel rate nationwide will rise by 5.8 percent this year, after an increase of 5.3 percent last year, and that in many major business travel cities, the increases will be even higher. In New York, according to a new report from the firm, the average price for a hotel room is projected to go up by 14 percent; in Miami, the figure is 9.1 percent, and in Chicago, 7.6 percent.
“The only things that will slow down the rate increase would be a severe economic slowdown and a lot of new hotel supply,” said Michael Rietbrock, who follows the hotel industry for Citigroup Investment Research. “There is not a lot of new supply coming.” via New York Times.