REPORT FROM THE U.S.—Global economic concerns might have some hoteliers feeling dreary, but a look at second-quarter industry data shows worldwide issues might not be negatively impacting hotels as much as one would think, according to executives from TravelClick.
“Obviously we are all aware that there are some issues worldwide and challenges in the eurozone and challenges even here in North America. That said, our numbers are still strong,” Caryl Helsel, VP of demand and distribution for TravelClick, said Wednesday during the company’s Second Quarter 2012 Global Hotel Industry Update webinar.
Most markets have done a fairly good job at managing rates, Helsel said.
Panama City, for example, held rates during the second quarter although the market experienced significant declines in occupancy, she said. “The kneejerk reaction is that if you cut rates, you’ll (increase) demand,” she said.
The key issue in determining whether to cut rates is if the market has a rate problem or a demand problem, Helsel said.
By comparison, the Middle East/Africa region did not take advantage of the opportunities to increase average daily rates during the second quarter. Demand is strong in many cities in the market, but rates still have not gone up, Helsel said. “My encouragement to that region is that you can hold rates more,” she said.
In Europe, there is some weakness, but it’s not as bad as most people think, Helsel said. There is still a lot of positive news coming from the region.
For example, while Zurich saw some declines during the second quarter, Frankfurt reported a significant revenue-per-available-room increase.
“Overall, it’s not as dreary as people are saying,” Helsel said.
Asia also performed well during the second quarter, she said. There were some declines in occupancy in a few markets, but Helsel reiterated her point to hoteliers in the region: “If we just respond by cutting rates, we’re getting into trouble.”
Distribution channel performance
Data from the second quarter for the top 50 markets tracked by TravelClick showed distribution among the channels remained consistent from what the company reported the quarter prior, said Rao Avasarala, VP of business intelligence.
An analysis of the $8.9 billion revenue by channel showed approximately 25% of the bookings were controlled by third parties (16.8% were online travel agencies and 9.1% global distribution systems), while the remainder were controlled by the hotel (36.7% were property direct, 21.3% brand websites and 16.1% central reservation office bookings).
One of the trends TravelClick is seeing is a small shift in bookings toward brands and the GDS over the third parties, he said.
“The internet did not crush the GDS channel as people predicted,” said John Hach, senior VP of global product management.
Looking at the pace for the first six months of the year, bookings for the GDS channel are ahead of the pace they were at this point a year ago, he said.
As for OTAs, the segment is expected to become more fragmented, Avasarala said. “A lot of the OTAs are seeing declines in comparison with a year ago,” he said. “There are so many options for consumers to create bookings on.”
Some revenue managers might look at this data and ask themselves, “Where am I getting my fair share of demand? Should I take advantage of that situation or should I focus on channels where I’m not going my fair share?” Avasarala said.
“You have to look at both the top line and bottom line,” Hach said.
Revenue managers need to look at this based upon the value of the guest. Some prefer to book through an OTA, while some prefer to book through travel agents.
“Make sure you are present in all of these channels—opaque OTA, merchant OTA, GDS, property website,” he said.
Think ‘local and immediate’
The investment in mobile and tablets is becoming an increasingly important one to make, Avasarala said. “If you’re not optimized on mobile and tablets, you’re losing that consumer,” he said.
“Over 50% of your audience has smartphones,” Hach said.
Additionally, the tablet is the fastest selling consumer technology device in history, he said.
What hoteliers will start to see is that the laptop is still important, but the convenience of these smart devices means consumers are starting to shift more toward using those instead, Hach said.
Of guests, 82% are using smartphones and tablets to make reservations booked within a day of arrival, and 58% of those guests were within 20 miles of their hotel, he said.
“It’s very important that we have inventory planned for the same day,” Hach said. “I think as this proliferates throughout the world, that lead time is going to be shortened and shortened.”