World travelers looking for a cheap place to stay may want to avoid Geneva, Dubai and Miami.
The three cities rank among the most expensive markets for hotel rooms, according to an index compiled by Bloomberg. In Geneva, the average cost for a night is $308, followed by Dubai at $273, Kuwait City at $253 and Zurich at $250. Miami is next as the costliest place for lodging in the U.S., at $245 a night.
Room costs are pushed up in high barrier-to-entry markets where developable land is scarce and the number of hotels limited, as well as by a relatively affluent customer base. In cities such as Edinburgh, which ranks above London, a limited supply of lower-end rooms pushes up expenses for visitors.
“What it comes down to is the cost of real estate and the availability of hotel rooms,” said Nikhil Bhalla, a lodging analyst at FBR & Co. in Arlington, Virginia. “Geneva, as many of the major cities in the world, is land constrained. The cost of development in Switzerland is probably among the highest in the world in part because of the beautiful scenery.”
Geneva is 32 percent more expensive than New York and London and 28 percent costlier than Hong Kong, according to relative index values.
Geneva also topped the list for five-star hotels, which are luxury properties that include such amenities as a spa, full- service health club and signature golf course. In that category, a room in the Swiss city costs an average of $614 a night, according to the index.
Los Angeles is No. 2 for the highest-end properties, averaging $481 a night, followed by Tokyo at $440. The five-star ranking includes cities with at least 10 hotels available for booking in that category.
The large presence of international organizations in Geneva helps buoy hotel rates, particularly at the highest end, according to Jan Freitag, senior vice president at Hendersonville, Tennessee-based research firm STR Inc. The United Nations and the World Health Organization have large offices in the city.
“Geneva is very expensive because of all the international organizations and the ancillary businesses in the city,” Freitag said in a telephone interview. “These people don’t tend to pay for themselves and that means they can stay at very high- end properties.”
Among European markets outside of Switzerland, a hotel room in Edinburgh costs an average of $241 a night, compared with $235 in London. Paris is next at $232.
Hong Kong leads the Asia-Pacific region and is No. 6 in the world, with an average $242 nightly rate. Singapore follows at $235 a night.
In the U.S., a room in Miami is more expensive than in New York, which averages $233 a night, and San Francisco, at $211, according to the Bloomberg index. Miami’s market is boosted by Collins Avenue, which runs along the beach and features trendy nightclubs and hotels including the Setai Miami Beach, Delano Hotel and the Canyon Ranch Hotel & Spa.
“Collins Avenue is by far the core hotel market in Miami,” Bhalla said. “But there aren’t a lot of places at the beach you can still develop on a larger scale.”
Increases in New York hotel rates have slowed because of an influx of new properties in the city, Bhalla said. Since 2006, New York has added 74 hotels and more than 13,500 rooms, according to NYC & Co., the city’s marketing and tourism website. The city has more than 92,000 rooms in its inventory, and will add more than 15,000 in the next three years, it said.
The Bloomberg gauge measures 106 cities. Globally, the cheapest market is Hanoi, where an average room is $62.
Rate calculations were taken for two blocks of time — Aug. 1 to Aug. 10 of this year and Feb. 1 to Feb. 10, 2015 — to account for holiday, promotion and convention-related pricing.
–With assistance from Wei Lu in New York.