NEW YORK— Corporate travel managers anticipate 2003 hotel spending and negotiated rates to be slightly lower than in 2002, according to a recent travel survey by UBS Warburg. Approximately 80% of their spending is in downtown/urban markets and 2003 expenditure and rate change expectations are consistent with the firm’s forecast that RevPAR will decline 1% to 2% in 2003 for the lodging companies with the greatest exposure to the largest U.S. urban markets, according to the firm. Further, next year travel managers said they plan to direct less business to luxury hotels, and more to mid-scale and upscale hotels, according to the survey. Not surprisingly, the use of reverse auctions for negotiating corporate transient and group meeting rates is expected to grow by 200% to 300% in the future. As a result, UBS Warburg said reverse auctions are a secular threat to room rates, particularly for urban hotels, due to the high volume of corporate travel and meetings in these markets. Meanwhile travel managers also will ask for more complimentary amenities for 2003, UBS Warburg said; however, this is not expected to have a material impact on property-level profits. Finally, travel managers responded by an 11:1 ratio that their companies will reduce corporate transient hotel spend with Four Seasons in 2003. As a result, UBS Warburg has lowered its Four Seasons estimates and price target.
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