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Why All Hotel Rates Are Not Created Equal

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It should come as no surprise that the overwhelming majority of business travel takes place between Monday and Friday. As Hotels.com’s Captain Obvious might say, people tend to go on work trips during the workweek.

Also obvious to anyone who’s ever taken a business trip, travel costs seem a lot different depending on who’s footing the bill - you or the company. Business travelers are price insensitive. They optimize for comfort and convenience over cost, and are generally willing to pay more for a flight or hotel room than a typical leisure traveler is.

Taken together those facts help explain why it’s more expensive to travel on some days of the week than others. Since hotels know that business travelers won’t be driven away by high prices, they raise their rates on weekdays, when most business travel occurs.

The difference between weekday and weekend hotel rates depends on location. If business travelers account for a high proportion of visitors to a city, the weekday premium will be greater.

That’s the take-away from findings released this week by the hospitality research firm STR, which analyzed average daily hotel rates from March 2014 to February 2015 in 25 U.S. markets.

Average Daily Rate Variance Between Weekday and Weekend Nights, February 2015 to March 2014

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These Cities Are All Business

At 23%, Houston had the largest weekday hotel rate premium. With all due respect to the Johnson Space Center, Houston is primarily a destination for business - not vacation - travel, due largely to its status as a center of the energy industry.

Following Houston was another industry town: Washington D.C. Although the nation’s capital draws a huge number of tourists, strong demand from corporate and government travelers meant that hotel rates were 20% higher during the week.

New Orleans, the third ranking city on the list, seems an unlikely place for hotel rates to spike during the workweek: “The Big Easy” is hardly synonymous with “business trip.” And in fact, hotel occupancy rates were higher during the weekend than during the week. But the average room cost was 15% higher on weeknights. Visitors who come to New Orleans for business or a trade show are apparently more willing to splurge on accommodations. As they say during Mardi Gras, expense away and laissez les bons temps rouler.

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These Cities Are Working for the Weekend

At the other end of the spectrum are cities where hotel rates are driven by leisure travelers.

In Anaheim, home to Disneyland, hotel costs were virtually identical during the workweek and the weekend. The same is true of vacation destinations like Tampa and Oahu, where the difference was only 1%.

Still, it’s interesting to note that even in places known for fun and sun, hotel rooms cost more during the workweek. In Los Angeles, for instance, hotel occupancy was actually higher during weekends, but since business travelers drove rates 4.5% higher during the week, hotels earned most of their revenue during this period.

Other Looks at Daily Hotel Costs

STR isn’t the first travel organization to look at the weekday-weekend hotel price difference. Lasy year Hotwire.com and Egencia released a study on the same topic, which also determined that Houston was the city with the biggest weekday price premium. However, the Hotwire-Egencia study ranked Phoenix as the city with the third most expensive weekday hotel rates relative to weekend rates, while STR ranked Phoenix as the fifth cheapest. The discrepancy can be chalked up to different data sets: Hotwire and Egencia based their findings on only one week’s worth of sample rates gathered in September of 2014.

Rocketrippers frequently take advantage of cheaper weekend hotel rates by adding vacation days on to their business trips. If you’re interested in knowing what cities present the best opportunities for “bleisure” travel savings, check out this cool tool from Orbitz labs.

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Have you ever mixed business with pleasure on a bleisure trip? Let us know by tweeting to @Rocketrip.

All Tags: Hotels, Industry News

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