News for the Hospitality Executive |
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By Jean
Francois
Mourier
December, 2010 2010--A Look
Back It’s been an
exciting year for the
hotel industry. From emerging technology that allows customers easier
access to
online booking portals, to a steady increase in hotel occupancy and
overall
RevPAR (finally!), 2010 showed that the hotel industry worldwide is
well on its
way to recovery. While nightly room rates aren’t quite back up to
regular
industry averages--and probably won’t be for a while--hotel revenues
continue
to increase. In fact, according to a survey conducted by MHRA, there
was an
overall increase of 10.6% when it came to tourist spending in 2010. Plus, many of
the big hotel
companies reported positive statistics when it came to business over
the past
year, leading to an overall increase in confidence for the year to
come.
Marriott, for instance, reported a 42% increase from the year prior by
the end
of the second quarter of 2010. Meanwhile, Intercontinental Hotel Group
reported
a 15% jump in profits as early as the end of Q1 of 2010. Hyatt, too,
saw its
numbers increase. The company reported its occupancy was up to 67% from
62% the
year prior by the end of August. And more significantly, Hyatt saw a
7.5% rise
in RevPAR in its US sales and a 17% increase in RevPAR internationally. Technology
Emerges and the
Industry Adapts Particularly
over the past year,
it has become evident that hoteliers and revenue managers must be
hands-on—identifying customer motivations and buying habits, foreseeing
consumer decisions and influencing those decisions by the way they
manage their
rates. In fact, in a recent industry survey, just over 27% of
hoteliers
reported that most of their business came from OTAs and online
channels--a much
higher percentage than just a few years ago. Because of this, using a
combination of traditional hotel revenue strategies combined with
practices
that involve sophisticated automated software have become imperative in
allowing hotel revenue managers to strategically use up-to-the-minute
information to give their property a competitive edge among other
hotels and
resorts. Additionally,
adopting many stock
market principles have enabled hoteliers and their revenue managers to
execute
more effective strategic pricing, rate discipline, automation and smart
computing--all
integral parts of a successful hotel revenue management strategy. The use of
algorithms has also
proved to be successful in determining crucial—and constantly changing—
information like demand for past dates and the average length of stays.
Using
algorithms, hotel revenue managers can also make forecasts and
predictions more
easily to ensure they are always selling their hotel rooms at the most
profitable rates. On the other hand, when supply is high and
demand is
low--which was the case for many hotels in 2010--the use of algorithms
allowed
hoteliers to reduce the risk of setting prices that were too high and
having
their rooms go unsold. As we near the end of 2010 and enter 2011,
technology
will continue to play a large part in the way hotel bookings are made.
In fact,
it is safe to say, technology is completely reconfiguring the average
hotel
booking strategy. Consumers have changed their preferences – value is
the new
luxury - and how and when they book hotel properties so 2011 will
definitely be
a year of change for the hotel industry. 2011--Looking
to the Future Many reports
have shown that in
2011, occupancy will continue to rise. A study recently conducted
by STR
showed that overall hotel occupancy was expected to rise to 58.8% (an
increase
of approximately 2%) and demand was expected to rise to 4.1%.
Additionally, the
same study found that daily rates were expected to drop 2.3% to an
average of
$95.45. In 2011, the
process for booking
hotels will continue to see shifts as well. The industry will see
the
booking window continue to shrink as today’s consumers not only require
more
flexibility with their vacation time, but they also tend to wait longer
in
hopes of finding the best deal. As well, new developments in
technology
are making it easier for the everyday consumer to book their hotel
room,
anytime, anywhere. With new and more capable smartphones hitting
the
market, new mobile booking applications introduced, as well as more and
more
social media sites expected to add booking widgets that will enable
customers
to reserve room nights from websites like Facebook, hotel bookings have
gone
mobile. In fact, Priceline’s research shows that 58% of customers
with
mobile devices were within 20 miles of their hotel when they made the
booking —
and 35% were within just a mile. When it comes to effective revenue management practices, 2011 will certainly call for strategies that implement quick and effective channel management, strategic pricing and the ability to stay one step ahead of the competitor. As we continue to move into a new era for the travel industry, hoteliers aren’t just dealing with making their property seen among more channels, they’re also dealing with more well-informed customers—customers that know what they want, where to look for it and how to compare rates to make sure they’re getting the best deal. In 2011, it will
become even more
essential to have a system that can manage multiple channels, as well
as keep
track of changing demand. Indeed, as we mentioned earlier, demand in
2011 is
expected to increase, while prices are expected to decrease. This
prediction
alone is a big indicator that hoteliers should be expectant of many
changes in
trends throughout the next year, making it even more important to have
a
strategy that will allow revenue managers to have immediate, real-time
access
to the most up-to-date information so that they can make the best
decision when
it comes to their revenue management strategies and marketing
efforts. When it comes to the future of the hotel
industry, it’s evident
that progressive technology and the evolution of consumer behavior will
make it
even more important to identify, research and address these emerging
trends in
a way that will work for a given hotel and its targeted demographic.
The next
year for the hotel industry definitely involves making the hotel stay
customized to suit a property’s targeted clientele, making an increased
effort
to identify their travel and booking habits and anticipate their needs
and
desires. It really becomes less about trying to beat the competitor and
more
about a personal relationship with consumers.
Jean Francois Mourier is CEO & Founder of RevPar Guru, a company that has developed an alternative type of revenue management and real-time pricing solution (combined with automated online distribution) to help hotels maximize occupancy and increase their profits. The company’s Yield Dynamic Price Engine, an integrated revenue management and pricing solution, adds unprecedented power and real-time adaptability to the pricing process, leaving managers more time to run their hotels. You may reach him through www.revparguru.com or by calling +1.786.478.3500. |
Contact:
REVPAR GURU INC.
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