NEW YORK—In the wake of recent global events, demand has been destructed and, as a result, there’s a “new normal” emerging for hotel companies. How can hoteliers begin to navigate the changing landscape that is directly impacting their bottom line?
“It’s important to look at the past, present and future. If you go back to the Great Recession of 2008 and terror attacks in 2011, they were global events. What happened recently in Paris, Orlando and Brussels are more localized terror events and they can hit at anytime. It’s not just about looking at terrorism; there are other events making an impact like the flooding in Louisiana,” explained John Hach, senior industry analyst at TravelClick, a global provider of revenue-generating solutions for hoteliers. “There are three primary issues affecting the industry, right now: infectious disease (Zika virus), the economy (Brexit) and terrorism (local and global). There is good news in the industry, but there are mixed messages. It’s not all bad or good.”
In a webinar providing an update on the hotel industry for Q2, TravelClick’s industry experts John Hach and Katie Moro, director of Demand360 Data Partnerships, gleaned the data from the company’s proprietary database to share in-depth analysis of the industry, the impact of destructive demand and best practices to compete for market share.
First, they looked at global trends for the second quarter where they noted of the five regions of the world—U.S., Asia-Pacific, Americas, Africa/Middle East and Europe—there are four that are trending positive on occupancy, according to Hach. “It’s positive, but not strong double digits as there’s still unrest in the Middle East.”
Looking at consumer behavior, Hach and Moro validated what has been clear to many: Mobile devices are creating a significant shift in how travelers book. One key piece of data that stands out is about hotel-branded websites, which contributed 21.7% of the $16-billion total revenue booked and 90- million room nights, according to TravelClick. Additional data shows exactly which channels consumers are using: central reservation office (10.9%); online travel agency (13.3%); global distribution systems (15.8%); hotel branded websites (21.7%); and direct or on-site (38.3%).
“Consumers are making reservations prior to arrival via the hotel’s app or branded website. We are seeing member-direct booking having an impact. It’s moving the needle,” he said. “It’s easy to make a reservation off an app on your phone plus, by booking direct, you’re getting points and inclusions. There’s just more in it for the guests. We’re all connected and bumping into each other because we’re all looking down at our phones, booking and researching travel.”
Online channels are continuing to grow as well, with a drop-off in voice dial or on-property reservations. Seeing a prime opportunity to gain market share through hotel-branded websites, Moro noted that tailored packages could help drive additional revenue. “Make it your own and target your ideal guests. Take the data into account to help determine who are your guests and where are they coming from, so you can tailor your website to them,” she said.
Hach agreed, adding, “The virtual hotel is just as important as the actual property. Ask yourself, ‘How do I need to change my marketing strategy as business shifts?’ You must understand where the business is coming from. It’s best practice.”
On an ADR-led recovery, Moro noted that the data is showing North America had a slight increase, holding strong on group bookings in Q2 and that helped from an ADR standpoint, while international growth was flat year-over-year and declined quarter-to-quarter. “The decline is across all channels, which is something to watch,” she said. “You need to understand your market and know when to drive business for your segment.”
Chicago is a good example to understand the current struggle, according to Moro, with the city being worse off in occupancy for Q1, but still holding ADR. “Although occupancy is down, there will still be local events such as marathons and conferences. You have to watch the market by day and by the week and drive that rate. We’re in a different marketplace now,” she said.
Hach and Moro urged hoteliers to examine their local markets, including the impact of external concerns; seek out new opportunities to drive rate; keep all channels open—OTAs, branded website, etc.—and take time out to rethink their game plan.
“Demand isn’t as strong as 90 days ago. At the end of the day, people want to travel, create memories and share it all on social media. It’s important to watch your local markets to glean what you need to do next.”
—Corris Little