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16 hotel pricing, demand trends for 2013
December 19 2012

A panel of marketers and revenue managers highlighted the top trends in pricing, distribution and mobile that will impact the hotel industry during 2013.

Highlights
  • The U.S. hotel industry has 24% more rooms under construction today than during 2011, according to Vail Brown of STR.
  • “2013 is going to be the year to focus on rates,” said Starwood Capital’s Ash Kapur.
  • “Google Hotel Finder is going to become more and more relevant,” Kapur said.

GLOBAL REPORT—The best hotel marketers are those who can not only keep pace with the world around them but also anticipate and act on future trends before they happen.

A panel of experts Tuesday attempted to cast some light on the road ahead in a Hospitality Sales and Marketing Association International webinar titled “Keeping Up with Trends.” Their insights during the 90-minute session touched on a variety of topics, ranging from pricing, distribution and mobile.

Their comments boiled down to 16 key points.

Pricing
1. While the total active development pipeline is still crawling along at a rate of only 3.5%, the U.S. hotel industry likely will see an uptick of rooms entering the market, said Vail Brown, VP of global business development and marketing for STR, parent company of HotelNewsNow.com.

There are 24% more rooms under construction to date than during 2011, she said, most of which are concentrated in the limited- and select-service sectors.

Vail Brown
STR

2. “We are still selling more rooms than we ever have before and expect that growth to remain strong in 2013,” Brown said.

3. However, corporate demand varies by sector, said Ash Kapur, VP of revenue management and distribution for Starwood Capital Group. The technology sector, for example, is “extremely strong,” whereas the financial, pharmaceutical and energy sectors are exhibiting some weakness.

4. Groups, Kapur said, will continue to be a mixed bag depending on the market. But “2014 is expected to be stronger for groups than 2013,” he added.
 
5. Widespread demand in general will give hoteliers increased pricing power, panelists said.

“2013 is going to be the year to focus on rates,” Kapur said, adding Starwood Capital is forecasting revenue-per-available-room gains across its portfolio “mostly driven by rate.”

STR’s 2013 U.S. forecast calls for a 4.6% increase in average daily rate, Brown said.

Distribution
6. Search-engine optimization and pay per click will continue to be top of mind for marketers, Kapur said.

7. The same goes for channel-mix optimization, he added, which will be crucial in hoteliers’ ability to drive rates.

8. Companies will shift even more of their focus to digital platforms, Kapur said. Traditional media, such as print, no longer will be given importance.

9. Online travel agencies are gaining, he said. Starwood Capital noted strong year-over-year increases in bookings driven through the likes of Expedia and Booking.com.

Expedia seems to be gaining share in major European gateways, while Booking.com is making headway in many tertiary markets in North America, Kapur said.

Orbitz and Travelocity, on the other hand, are becoming less relevant, he added.

10. “Google Hotel Finder is going to become more and more relevant,” he said, noting Starwood Capital is using the platform for many of its hotels in Europe. Still in beta testing, the experiment has yet to generate high volumes—although Kapur thinks that eventually will change.

11. Hotel companies will begin to create new platforms—so-called “vanity” or hotel-independent sites—to increase their digital footprints and drive more traffic online, Kapur said. Starwood Capital, for example, is creating new property-specific websites that speak more directly to given markets or traveler segments than a standardized corporate website would.

Mobile and technology
12. The next 12 months will see no interruption in the thundering stampede of hoteliers to the mobile space, panelists agreed. As more Web browsing continues to happen exclusively on mobile, there is an imperative to bring brands’ offerings to the third screen.

Cristian Morosan

13. Travelers, by extension, will continue to clamor for more “must have” mobile devices—most of which utilize more intuitive interfaces that will allow consumers to research, search and find the best rates online, said Cristian Morosan, assistant professor at the Conrad N. Hilton College of Hotel and Restaurant Management at the University of Houston.

14. The ability to book on the road will lead to more last-minute bookings, which in aggregate will contribute to shorter booking windows throughout the industry, he said.

15. The “always on” usage patterns will allow hoteliers and guests to communicate more instantaneously—a capability consumers are beginning to expect and demand, Morosan said.

16. Mobile devices and social media platforms also will allow marketers to better target niche customer segments, he said.

Coming Thursday: Marketing experts from this webinar share tips for establishing a presence in key Asian markets. 

COMMENTS   Show All
djaurand
12/20/2012 10:25:00 AM
stephencurtis Thanx. The problem with most of the suggestion in the story, is they work on the paradigm of setting up the website and forgetting about it. Its supposed to thousands of room nites, automaticly. Hotels treat their website like a billboard on the information superhighway, they decide to invest in one, spend a lot effort to design it, have the design put on the billboard.....and forget about it. I've been asked to make a proposal to hotels for photos and a virtual tour, did a quick look at the hotels website and during the conversation with the Director of Sales I realized the DOS had very little idea what was on their website. There's almost a total disconnect between the property and the website. I've been trying to teach my hotel virtual tour customers to use a phrase when a potential customer calls; "Can you get on the Internet while we're on the phone?" and then guide them through a Online Property Tour over the phone and Internet. If the meeting planner or bride-to-be is comparison shopping other hotels, its a safe bet my hotel customer's competition isn't doing that even if they have a virtual tour ontheir site. SEO, Mobile compatable wesbites, Pay per Click and channel-mix optimization are all important, but selling a hotel online is STILL ABOUT THE HOTEL
stephenlcurtis
12/19/2012 5:20:00 PM
djaurand hit the nail on the head. A website serves 3 key purposes: 1) Revenue Generation, 2) Brand Building and 3) Research Information Source. In a tertiary fashion it also serves as a hub to gather analytics for all online activity regarding the property's presence online (if property linked and integrated to all online channels). Websites must be mobile friendly, culturally aware, merchandised (with solid "call to actions"), meet with user expectation (coherent structure is part of that), and above all else be an effective sales tool for the property and the brand. High resolution photography, and more important professional photography, that showcases the properties key differentials are essential.
Hotelie
12/19/2012 2:13:00 PM
Hi, On #9 (OTA): There should be mentioned that we are seeing a rebellion on Northern Europe with major regional chains abandoning Expedia "en masse" to focus on brand.com.
djaurand
12/19/2012 10:59:00 AM
The problem with several of these web based ideas is the websites at the end of the chain bringing potential customers to that website. SEO may get thousands of potential customers to a website, but if poor website design and content means too few sales are "closed" all that traffic is meaningless. Incoherent structure and low quality photos defeat much of the effort to get people to websites
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