It seems like only yesterday we were looking at 2011 and predicting what would happen in 2012. Now, here we are at the very near close of 2012 looking at what trends will continue or emerge in revenue management in 2013.
Sometimes we have to look back to look forward. Let’s go back to the beginning of the year (1 January 2012) to take a look at what was predicted and what actually transpired … and what we can expect for 2013:
Average daily rate increased 4.3% in 2011. It was expected to keep climbing in 2012.
The prediction was technically correct, but the reality is that rate grew slightly as opposed to significantly growing. STR, parent company of HotelNewsNow.com, recently released preliminary year-end numbers for 2012, which show that the industry is expected to record a 2.3% increase in occupancy and an ADR gain of 4.3% by end of year. Occupancy for 2012 is predicted to finish at 61.3% with ADR of $106.17.
For 2013, STR forecasts occupancy to remain relatively flat with a 0.3% increase to 61.4% and ADR rising 4.6% to $111.01. How will this experience and prediction play into your strategies?
This time last year corporate travel was predicted to increase. Corporate demand has indeed recovered. This, combined with the fact that North American supply remains limited and yield management continues to be effective resulted in rising occupancy and higher ADRs.
Based on Egencia’s 2013 Global Corporate Travel Forecast, hotel ADR for top corporate travel destinations will be slightly up, by 3% in North America. The report states that “there will be significant variation at individual market level as supply, demand and local economic conditions also play a part.”
How will this pressure drive leisure rates and inventory demands at your hotel?
A year ago, most hoteliers agreed that online travel agencies were a necessary component in the distribution tool kit. At the same time, it was predicted that international and smaller OTAs would start chipping away at the larger OTAs.
Today, the four largest OTAs (Expedia.com, Orbitz, priceline.com and Travelocity) remain strong while smaller OTAs continue to emerge. OTAs currently contribute about 8% of hotel bookings, according to Distribution Channel Analysis: A Guide for Hotels. This seems a relatively small number until you consider that OTAs actually represent 45% to 55% of all digital hotel bookings. The second statistic may explain the frequency with which the topic of OTAs continues to come up in conversation, in industry education and in industry news.
Going forward, as always, in addition to having a solid strategy for positioning your hotel on an OTA, you must have a solid strategy in place to determine when, for who and at what rate the OTAs make financial sense for your property.
At the same time, consider the following from J.D. Power and Associates’ 2012 Independent Travel Website Satisfaction Report (published 30 November 2012): Pricing is the strongest driver of satisfaction with independent travel websites. "While other factors certainly affect overall satisfaction, 75(%) of online travel website consumers indicate price as a primary purchase reason, so there is no denying price greatly impacts the overall website experience." said Sara Wong Hilton, director at J.D. Power and Associates.
Search engines, led by Google Hotel Finder, were expected to push more into online travel.
Today, Google Hotel Finder search displays OTAs’ rates to the customer, reinforcing the importance of having and implementing an overall pricing strategy. The search engine’s move into online travel continues with the most recent news that Google Hotel Finder is now available on all global Google domains (via the URL google.com/hotels). In the U.S., a Google Hotel Finder search box is featured on all search engine pages for destination hotel searches as well.
Does this sound familiar? Intelligence reports, channel management, seamless property management systems connectivity … Is it necessary and what is the return on investment? A year ago, conversations about this were numerous.
As predicted, most, if not all, technology companies today interface with one another in some fashion. PMS, central reservation system, revenue management system, global distribution system, OTA, competitive rate shoppers and channel managers all interface allowing the revenue manager to review the different provider products, their pricing, their service and their benefits of utilizing this type of connectivity as opposed to traditional manual efforts.
Expect the connectivity to continue to improve, and consider what options are available to maximize the systems you have in place.
Is social media a distribution channel or a marketing tool? Can anyone agree? They certainly couldn’t last year, and the debate will continue into next year.
What we all can agree on for 2013 is the need to define your objectives. Know what you want out of social media and develop your strategy from there. Decide whether you will focus on social media as a convertible and measurable distribution tool, as a marketing channel, as a customer service channel or as a combination of those.
With the complexity of the social media channel, it is very necessary to monitor reviews, comments and content across all channels because the indirect effects of negative media will result in lowering the conversion on the actual distribution channels.
Last year the debate raged about when and how (or whether to) embrace flash sales for hotels.
As 2012 played out, we saw Hotwire close Travel-Ticker, and Groupon and LivingSocial are consolidating after reporting financial losses.
In 2013, as the economy continues to improve (keep your fingers crossed), it will be interesting to watch the daily deal sites to see how and if they continue. For hoteliers that are seeing occupancy and rate growing steadily year over year, how would they work them into their overall revenue and marketing strategy?
Mobile is beyond phones. Corporate and leisure travelers alike are using tablets to research and book travel. Is your hotel website optimized for these devices? Is your hotel utilizing location optimization for your outlets (restaurant, bar, spa, golf, daily specials) to reach prospects ready to buy?
HSMAI’s Digital Marketing Council recently shared that, “With the increase of tablet ownership and usage, mobile is moving beyond the original scope of mobile phones into broader territory. For hoteliers, mobile for tablets presents a different opportunity than mobile for smartphones.”
The Council recommends that “While mobile phones are particularly relevant in the shop, book and experience phases, tablets are uniquely positioned to aid in the dreaming or desire to be inspired phase, as well as the learning phase. What this means is that a tablet-specific website should be considered because the consumer behavior varies so dramatically between the two mobile devices. Speed and ease of use are critical for the smartphone, but vivid photos are more essential for the mobile tablet.”
All of this will continue to impact how travelers book their travel, including booking travel at the last minute. The OTAs have embraced this trend combining last minute deals along with the ability to search all of their hotel offerings and book quicker and easier from mobile devices.
How will you segment and target your strategy and messaging for mobile devices?
We are certainly seeing strong results. Some brands are reporting strong demand from overseas visitors from Brazil, Russia, India and China.
These trends, combined with the efforts of Brand USA to promote increased international travel to the United States, are predicted to result in a 3.6% to 4.3% average annual growth in travel and tourism over the next five years, according to the International Trade Administration.
The Department of Commerce expects visitors to the U.S. from world regions to grow at different rates over the next five years:
Asia will grow 64%
South America will grow 60%
Oceania will grow 41%
Countries with the largest total growth percentages are:
China at 259%
Brazil at 83%
Argentina at 67%
South Korea at 51%
India at 47%
Australia at 46%
Venezuela at 45%
How are you marketing to and pricing for these international markets?
I hope you’ll continue to learn more about the forecasts and trends that will impact us in 2013.
About the Author
As Market Director – North America for ChannelRUSH, Susan is responsible for spearheading growth and brand awareness for the technology distribution software company. She has over 20 years of hospitality industry sales and marketing experience in hotels, OTAs, car rental, and CVB’s. Prior to ChannelRUSH, Susan was Director of Product Development for OneTravel.com and was responsible for increasing hotel net rate agreements in key markets for the company. She also worked for the Orlando Convention and Visitor’s Bureau as Sales Development Manager, uncovering new convention business for Orlando. During her tenure with the Hertz Corporation she introduced and implemented the convention meetings and contracting for Hertz’ meetings program nationwide. She also spent time in group sales for Marriott, Hilton, Sheraton, and Intercontinental in Florida, Michigan, and Virginia. Susan is a graduate of Radford University where she earned a B.S. in Marketing. She is a member of HSMAI’s Revenue Management Advisory Board.
About the 2012 HSMAI Revenue Management Advisory Board
The Revenue Management Advisory Board leverages insights, emerging trends, and industry innovations to guide the development of products and programs that optimize revenue for hotels.
• Co-Chair: Jon Eliot, CRME, CHA, Vice President of Revenue Management, Premier Hospitality Management
• Co-Chair: Sloan Dean, CRME, Vice President of Sales & Marketing, Interstate Hotels & Resorts
• Immediate Past Chair: Scott Roby, CRME, Vice President, Revenue Management, Evolution Hospitality
• Chris K. Anderson, Ph.D., Professor, Cornell University
• Bonnie Buckhiester, President & CEO, Buckhiester Management USA Inc.
• Sheila Cosgrove, Director, Revenue Management Ops & Planning, Intercontinental Hotels Group
• Kathleen Cullen, CRME, Vice President Revenue Strategies, Heritage Hotels and Resorts
• Kent Duncan, CRME, Vice President, Sales & Revenue Strategy, Marcus Hotels & Resorts
• Tammy Farley, Principal, The Rainmaker Group
• Neal Fegan, CRME, Executive Director of Revenue Management, Fairmont Raffles Hotels International
• Rhett Hirko, CRME, Director of Revenue Analytics, Hyatt Hotels & Resorts International Operations
• Jay Hubbs, Vice President, Regional Sales, ReviewPro
• Burl Hutchison, CRME, Director of Revenue & System Optimization, Sabre Hospitality
• Klaus Kohlmayr, Senior Director, Consulting, IDeaS - A SAS Company
• Mark Molinari, CRME, Corporate Vice President of Revenue Management and Distribution, Las Vegas Sands
• Orly Ripmaster, CRME, Senior Associate, KSL Capital Partners
• Mark Robertson, Central Director Revenue Management, Wyndham Hotel Group
• Susan Spencer, Market Director - N. America, ChannelRUSH
• Trevor Stuart-Hill, CRME, President, Revenue Matters
• Paul Wood, CRME, CHBA, Vice President of Revenue Management, Greenwood Hospitality Group
The opinions expressed in this column do not necessarily reflect the opinions of HotelNewsNow.com or its parent company, STR and its affiliated companies. Columnists published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.
I was curious if I am correctly interpreting the excerpt below as implying that only 16% of all hotel bookings are made digitally – seems much lower than I would have expected?
“… OTAs currently contribute about 8% of hotel bookings, according to Distribution Channel Analysis: A Guide for Hotels. This seems a relatively small number until you consider that OTAs actually represent 45% to 55% of all digital hotel bookings.”
Login or enter a name
Post Your Comment
Check to follow this thread via email alerts (must be logged in)
(4000 characters max)
Comments that include blatant advertisements or links to products or company websites will be removed to avoid
instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or
offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments
do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations
to our editorial staff.