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Ash cloud leads to spike in airport hotel rates

Some European airport hotels have hiked rates — in some cases doubling them — as a volcanic ash cloud from Iceland left fliers stranded, creating a crush of desperate customers.
/ Source: Reuters

Some European airport hotels have raised rates sharply in the last week — in some cases doubling them — as a volcanic ash cloud from Iceland left fliers stranded and created a crush of desperate customers.

But hotel operators say they were merely pricing their rooms to meet that overwhelming demand, and that they have in fact lost more business in the long run than they gained in the first days of the crisis.

Millions of people have had travel plans disrupted since the eruption of the Eyjafjallajokull volcano turned much of Europe into a no-fly zone. Those lucky enough to get a hotel room at a major airport in recent days appear to have paid dearly.

Hotel data provider STR Global said Monday it found revenue per available room at major European airports grew in the high double digits in the week ended April 17 over a year earlier.

The figure is a crucial measure of hotel industry performance. STR Global found it rose 69 percent at Amsterdam Schiphol, 70 percent at London Heathrow, 137 percent at Brussels and 369 percent at Frankfurt Rhein-Main.

While the figures are skewed by other events — like a trade fair in Frankfurt — they give at least some picture of what kind of rates airport hotels were able to charge.

On April 16, for example, average room rates rose at least 40 percent over the prior day in three of the six cities STR surveyed. On April 17 daily rates were at least 20 percent higher than the prior day in four of the six cities.

Factors at play
Industry officials say the reality is more nuanced that the figures suggest.

The association of hotels and caterers in Flanders, where Brussels Airport is located, said a number of factors explained higher prices now than a year ago, when the height of the economic crisis meant occupancy rates around the airport were around 50 percent and prices less than half the official rates.

Individuals having to book a room at the very shortest notice may well have faced the official room rates.

"Once the problems have disappeared, this will be an old story as competition will come back into force and drive down the prices," said Secretary-General Luc De Bauw.

In the Netherlands, hotel operators say some travellers may have experienced their hotels charging them the maximum listed rate for their rooms, whereas in prior days and weeks they would have been offered a lower rate due to less demand.

"The last room available is the same as (the last seat) on the plane and as flowers on Mother's Day," said Kees Teer, general manager of the Dorint hotel at Schiphol.

"The rate asked Friday before the natural disaster was doubled in the (following) week, and that's a normal process given that you're working with a capped maximum rate and you can only ask that rate if demand is very high."

Teer added his hotel lost more business Monday due to cancellations than it made with extra customers last weekend.

The world's biggest hotelier InterContinental Hotels Group Plc says it has seen some rise in bookings at airport hotels, but this has also been balanced by cancellations.

The group has nine Holiday Inn and Crowne Plaza hotels close to UK airports where it has seen bookings and room rates rise due to the disruption to air traffic. Prices have risen to near the top of its pre-set range of room rates, the group said.

And in some places, hoteliers simply denied that there had been any rise in rates at all.

"Hotels in Frankfurt held rates unchanged and in some cases lowered them. They generally tried to accommodate customers as much as possible and did not benefit from customers' misfortune," said Julius Wagner, managing director of the hotel and restaurant association for the German state of Hesse.

"The statistics do not reflect what we are hearing from hotels in the region."

Additional reporting by Phil Blenkinsop in Brussels, Christoph Steitz in Frankfurt, Eva Kuehnen in Frankfurt and David Jones in London; Editing by David Cowell