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:
ADR
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?
Corporate travel
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?
OTAs
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
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.
Technology
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.
Social media
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.
Flash sales
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
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?
Inbound international US Travel
European travel into the United States was predicted to increase this year. As of 30 November, more than “66 million international travelers are projected to visit the United States, an increase of 6(%) over 2011 visitor volume,” according to the International Trade Administration at the U.S. Department of Commerce.
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%
- China at 259%
- Brazil at 83%
- Argentina at 67%
- South Korea at 51%
- India at 47%
- Australia at 46%
- Venezuela at 45%
I hope you’ll continue to learn more about the forecasts and trends that will impact us in 2013.
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