|Sabina Wyss di Corrado, associate director, Christie + Company (left) and Philip Camble, director for Whitebridge Hospitality Limited.
LONDON—Fluctuating and unpredictable exchange rates are among key concerns for hoteliers as the global hotel industry continues its quest to dig out from the Great Recession.
Key decision makers participating in a roundtable discussion held in late February at the offices of STR Global, a sister company of HotelNewsNow.com, said the exchange-rate situation is one they must keep tabs on daily to ensure pricing integrity and maximize revenue opportunities for hotels in Europe.
Shawn K. Jereb, corporate director of revenue management for Orient-Express Hotels Limited, said keeping tabs on exchange-rate issues is one of several key pieces to the rate-management philosophy his company implements.
“It is difficult to project,” Jereb said. “From the pricing side, we look at how that will benefit us. We look at source markets. We look at ways we can change what we initially anticipated doing with pricing and in part because of exchange rates we can target specific feeder markets (to market to).”
Elizabeth Randall, managing director for STR Global, said because the exchange rate is good for some currencies and bad for others, there’s always opportunity for hotel companies to have success stories.
“When we look at the long-term forecast, we anticipate the pound will strengthen against the euro, but it will stay relatively low or maintain the same ratio against the (U.S.) dollar because the expectation is the dollar will increase,” Randall said. “From a source market perspective, certainly you have a lot of Americans come over and there is the positive news there because it’s still an affordable destination.
“But for the local domestic market and from a German traveler perspective, for example, that creates issues because (London) does become an expensive destination,” she said. “And for the weekend trips or quick trips from continental Europe, it does become a disadvantage.”
Philip Camble, director for Whitebridge Hospitality Limited, said his consultancy’s clients are reporting quick weekend trips are a casualty when it comes to economic difficulties and upside-down exchange rate conditions.
“The last thing people want to give up is their main holiday, but they will give up their holiday ‘snacking,”” he said. “The weekend trips, the short trips, quite frankly anywhere in Europe (are being shelved). It’s the big decision whether to go or not, it’s not the rate of the room. Whether that’s going to be £400 or £200 ($632.60 or $316.30) , they’re just not doing it.”
Sabina Wyss di Corrado, associate director, Christie + Company, said the U.K. regions outside London have been hit hard because of that mentality.
“(Country regions) used to pick up a lot of nice of demand on the weekends,” she said. “It’s just not happening anymore.”
A lot more looking = some more booking
However, what is happening, according to Nigel Huddleston, industry head, travel for Google, is people are dreaming of going away. This is evidenced by the number of online queries for destinations that began to rise last autumn, even if consumers aren’t acting upon the urge to book.
“There’s a strong correlation between total volume and queries and actual bookings,” he said. “But it’s not one to one. Just because we see a 15% increase in queries, it does not mean we will see a 15% increase in bookings. But if we see a 15% increase in queries we might see a 2%-to-3% increase in bookings.”
“It’s interesting because it affects us in a way that we see as quite positive,” Jereb said. “We are seeing booking windows constricting, and we are seeing pace declining. So to hear from Google that actually short-term is picking up is great news in terms of confidence. If the window is constricting, that’s fantastic because that means demand will come, and that’s fantastic.”
Huddleston said one notable trend is the increase in queries for all-inclusive destinations.
“You see the first choice going all-inclusive,” he said. “Which is why Spain, even the domestic market in Spain, is overall atrocious—because of the lack of that supply.”
He did add, however, the U.K. and Northern European feeder market to Spain is “doing very well.”
“We’ve seen decline in interest to certain areas like Greece and Egypt, but that’s been a huge benefit to all-inclusive resorts in the Canary Islands,” Huddleston said.
Wyss di Corrado said the Arab Spring is the reason for the improvement in some areas.
“At the moment, people still want to go away, and they don’t want to fly too far away,” she said. “They don’t want to go to Africa, so where else do they go?”
More visas means more visitors
Huddleston said some areas in the Mediterranean region that have eased visa restrictions, such as Turkey, are enjoying a huge influx of Russian and Eastern European travelers.
“We see ‘visas’ as a search term—it comes up again and again and again,” he said.
He added travelers typically look at 26 websites when they are preparing for holiday.
“They’re looking at flights, they’re looking at accommodations, they’re looking at review sites, maps, all sorts of photos,” he said. “Then, they are also looking at visas and other commentary there. It’s a factor in the query and the customer journey to making that booking that wasn’t there a few years ago.”
The visa issue is a big one for the United Kingdom, especially when it comes to Chinese travelers, said Liz Hall, head of hospitality and leisure research, PricewaterhouseCoopers LLP.
“There are quite a few Chinese shoppers, and a few do get through the system but it is a wasted opportunity,” she said.
Camble agreed. He said Germany’s decision several years ago to facilitate more visas for Chinese travelers was a good move for the country.
“Germany, which is not a top-tier tourist destination for Chinese, became one of the top destinations for Chinese in Europe because they couldn’t go anywhere else,” he said.
Randall said the opportunity for Europe with Chinese travelers is with the cultural landmarks.
“It’s about being in London, seeing Trafalgar Square and going to Buckingham Palace,” she said. “From an offering perspective, we’re really missing an opportunity.”