News for the Hospitality Executive |
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By Jean
Francois
Mourier
October 14, 2011 In a year where positive economic news seems
to come
qualified with the phrase “it could have been worse,”
better-than-expected
hotel industry trends suggest that the 2011-2012 holiday season stands
to
please hoteliers even if it disappoints web-savvy bargain-hunting
travelers. It
may still be an anemic economy for many, but for the hotel industry, it
isn’t. Barely a month since the Labor Department
announced that the
nation failed to add a single job in August,
there remains confidence that at least some sectors of the economy are
starting
to rebound, namely hospitality. PKF, the hospitality research firm,
estimates
that revenue per available room will grow by 7.2 percent this year – an
upward
revision from an earlier estimate. While consumers may be traveling fewer miles
and to less
expensive destinations, the desire to recharge ones batteries through
getaways
remains robust. Leisure travelers, maybe out of a need for
escapism or
something entirely else, remained fairly recession proof. Another
positive
sign: the Travelers Sentiment Index jumped nearly five points from
April to
July, according to the US
Travel Association. The point:
recession or no
recession people are still eager to travel. This is a particularly
strong
metric as the summer season, along with the holidays, are the two
mostly likely
times people travel. Even with fewer
deals come
Thanksgiving and Christmas, travel websites are still likely to
continue
offering highly tailored search experiences so that even if travelers
are
forced to shell out a little extra cash this year, they will at least
be
getting exactly what they seek. Online Search
and Deal Hunting
Continues Google’s Hotel Finder, which launched in July, uses the company’s
signature
interactive mapping technology to allow users to select a region of a
city
they’re interested in staying and shows the local amenities and social
outlets.
The site also displays a rooms’ current price versus its historical
averages. Room77 is the slightly older new kid on the block
competing with
Google. Launched in February, the site, as its name implies, focuses on
the
quality of one’s room, its size, and its proximity to hotel amenities.
More
than just a gimmick, the site allows users to use a “virtual window”
(along
with hotel blueprint maps) to see what their rooms’ view would look
like. Like the other
examples, Hipmunk is trying
to zero in on exactly what a customer wants for a given price. Launched
in
March, the site uses highly detailed “heatmaps” to illustrate a given
hotels’
proximity to nightlife, dining, landmarks, and shopping. It’s also not
above
humor to help give a customer what they seek: hotels are price rated
as:
“cheap,” “average,” and “pricey” while booking flights contain an
“agony”
factor taking into account flight time, price, time of departure and
the number
of connecting flights. In an ironic sense, the hotel industry’s
continued revenue
seems to have little to do with the still-weak economy. The Labor
Department
foresees high
unemployment around 9 percent persisting through the bulk of next
year or
longer. The international financial mood remains bleak and there are
still
latent fears over a double-dip recession. But what the economic data
underscores, isn’t so much that American’s wallets are getting lighter,
rather,
they’re having trouble getting heavier, filling back up. The bottom line is that leisure travelers,
regardless of the
national unemployment rate or wildly fluctuating stocks, will still
need that
getaway. So the best thing
hotels can do to remain at their revenue
and occupancy best is to go for balance and revisit their pricing
strategies. Be Dynamic Dynamic pricing
provides the answer to the occupancy vs.
profit margin dilemma by allocating price points to the demand in real
time. In
other words, balancing what the market wants with what it’s willing to
pay. It’s a tool by which hoteliers can reach a natural
equilibrium point
in their given market, and also within each individual booking
transaction. In terms of hotel
rooms, which are inherently
perishable, achieving this equilibrium is critical for hotels to remain
profitable -- whatever the economic outlook. Intelligent revenue
solutions use
information transparency - the relative ease with which pricing data is
obtained
from hotels in a client’s competitive set along with demand data from
multiple
sales channels - to optimize pricing on a moment-by-moment
basis. Dynamic
pricing is such an improvement over traditional pricing methodologies,
like
historical or seasonal rate setting, which are still in wide use at
many
hotels. It aims to not overprice a room and leave it unsold, but
neither
sell a room too cheaply and compromise margin. Continuous real-time
pricing and
inventory monitoring is designed to approach 100% occupancy, and create
optimal
rates with every booking. Deal sites and pricing models aside,
expanding the hotel
industry’s revenue recovery good news through Q4 and into next year
shouldn’t
require rocket science. Of course travelers will continue using booking
and
hotel finding sites. And, yes, dynamic pricing is a valid method for
reaching
fair room rates, but none of these facts should surprise those in the
know.
Quality hotels need to also focus on what they do best – beyond room
rate
tinkering: customer service. Whether through a website whose
staff
responds immediately to customer concerns or a front desk that’s
equally
attentive, the personal touch can go far in enticing customers to open
their
wallets. While much of the nation continues to digest
“it could have
been worse” economic language, the hotel industry, thanks to its
successful
weathering of the economic storm, is again optimistic that the news
“can always
be better.” Bargain hunters may struggle some come the holidays, but in
the
long run fewer deals suggest a healthier hotel industry and that’s
better for
the US economy overall. Websites will help bargain hunters while
dynamic
pricing models and customer care will benefit the industry. Either way,
it
should still be a very prosperous holiday season.
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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