Hotels in Moscow have been revealed as the world’s most expensive for a fifth consecutive year.

According to the survey by the Hogg Robinson Group (HRG), the international corporate travel services company, reflects a challenging year for the hotel market, a common theme throughout the business travel industry.

Across the world, all regions reported falls in average room rates in local currency terms, with only a small number of cities such as London, Houston and Johannesburg avoiding the double digit falls seen elsewhere. The weakening of the British Pound was again a key factor affecting rates paid by corporate travellers from the UK, particularly those travelling to the US and the Eurozone.

Trends noted by HRG include:

* For the fifth consecutive year, Moscow has emerged as the most expensive destination worldwide, despite posting a 5% fall in average room rate in local currency terms. A business traveller from the UK would expect to pay an average of £266.56 for a hotel room there

* London also saw a 5% decline in average rate, down from the 3% growth over the same period last year and dropped from 16th to 29th place in the ranking of the most expensive cities. It was however able to take advantage of increased demand due to the weakness of the Pound and was less affected than the UK provincial cities

* The Middle East region again experienced weaker rate falls than other regions. Abu Dhabi moved up from 5th to 2nd place in the rankings, only seeing a 1% decrease in average room rate, and Manama (Bahrain) shot up to fifth place, reflecting demand outstripping supply in the region

* Difficult trading conditions resulted in key cities in North America seeing decreasing rates when measured in local currency, except for Houston, a major centre for the oil & gas industry, and the Canadian capital Ottawa.
Although New York City saw one of the largest declines in local currency terms (23%), market conditions there showed some signs of improvement towards the end of 2009, even when taking into account the significant downturn in the last quarter of 2008

* The budget hotel sector remained static year on year facing increasing competition from the 3 and 4 star market; the top end of the market held up well, with the lowest average rate decline seen in 5 star hotels (3.5%) as top hoteliers proved willing to sacrifice a degree of occupancy in order to maintain rate integrity

Top 10 most expensive cities worldwide (ranked by GBP): 2009 vs. 2008

Despite having the highest average rates globally, all the cities appearing in the top 10 saw a backward movement in rates when measured in local currency. Clearly the weakness of the UK Pound against many foreign currencies has had a strong effect on the prices paid by the UK corporate traveller.

Half of the top 10 is made up of European cities but it is Moscow that retains its position as the city with the highest average room rate for the fifth consecutive year – reflecting its maturity as a business destination. Nevertheless, Moscow’s average room rate has declined because of a fall in demand from within the banking and finance sectors and an increase in supply from new openings in recent years.

Abu Dhabi is the second most expensive city surveyed, having moved into the top 10 at fifth position in 2008, emphasising the lack of supply there. In neighbouring Dubai, where supply outstrips demand, the rates continued to drop in 2009 taking it out of the top 10 into 16th position.

After a 5% fall in average rate HRG has seen London fall further down the list to 29th from 16th position in 2008 and 10th position in 2007, in part attributable to the weakening Pound against the Euro. Also falling dramatically out of the top 10 this year are Mumbai (27th), Stockholm (20th) and Zurich (12th).