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Hotel Revenues on the Rise for 2011 Holiday Season 

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 or by calling +1.786.478.3500. 

786-478- 3500


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