How Trends Affect Booking Patterns Within The Hospitality Industry
June 12, 2008
As an hotelier, you are most probably aware that your occupancy levels and profit margins are directly proportionate to your understanding of your guests, the trends in the hospitality industry; and your ability to manage your distribution channels based on these two elements. This article seeks to help you manage your distribution channels more effectively by keeping you informed about the different factors that are shaping the hospitality industry.
Currently, there are two key factors that are affecting the booking patterns of travelers.
The first factor is the convenience and ease that the ‘Internet’ brought with it. Years ago, people looking for hotel accommodations used to head for the nearest travel agent, as it was the simplest way to book. Today, the internet has torn down barriers between hotel and guests; thus putting the guest in the driver’s seat. Guests can now compare price, ratings and amenities of hotels and read reviews from previous guests easily. This new and open atmosphere has changed the way a traveler books, as a majority of people find the internet an easier and more convenient medium to source and book their travel requirements.
The second factor affecting the hospitality industry is the state of the global economy. Currently, the economy is experiencing upheaval and we are witnessing a slow down in growth of both domestic and international economies. Most companies are reacting to this by tightening their budgets. A similar effect can be seen amongst leisure travelers. This environment has more and more travelers foregoing traditional booking channels ‘travel agencies’ for non-traditional channels ‘travel websites or supplier websites’ as it allows them to compare package and price easily.
Take a look at the finding of a recent study by comScore that elaborates on the changing trends:
Total U.S: Home/Work/University Locations
Source: comScore, Inc.
*Excludes auctions and managed travel.
Total U.S: Home/Work/University Locations
Source: comScore Marketer
"With consumers shifting their spending toward lower-cost alternatives, it makes sense that marketers would be shifting their ad spending accordingly to achieve better marketing ROI," Levitt said.
Hoteliers who wish to remain competitive in this slowing economy need to adapt and redistribute their inventory, if they want to continue to reach travelers easily and effectively. So the question of the hour is, ‘72% of hoteliers have redistributed their inventory and their ad spending. Have you?’
June 12, 2008
As an hotelier, you are most probably aware that your occupancy levels and profit margins are directly proportionate to your understanding of your guests, the trends in the hospitality industry; and your ability to manage your distribution channels based on these two elements. This article seeks to help you manage your distribution channels more effectively by keeping you informed about the different factors that are shaping the hospitality industry.
Currently, there are two key factors that are affecting the booking patterns of travelers.
The first factor is the convenience and ease that the ‘Internet’ brought with it. Years ago, people looking for hotel accommodations used to head for the nearest travel agent, as it was the simplest way to book. Today, the internet has torn down barriers between hotel and guests; thus putting the guest in the driver’s seat. Guests can now compare price, ratings and amenities of hotels and read reviews from previous guests easily. This new and open atmosphere has changed the way a traveler books, as a majority of people find the internet an easier and more convenient medium to source and book their travel requirements.
The second factor affecting the hospitality industry is the state of the global economy. Currently, the economy is experiencing upheaval and we are witnessing a slow down in growth of both domestic and international economies. Most companies are reacting to this by tightening their budgets. A similar effect can be seen amongst leisure travelers. This environment has more and more travelers foregoing traditional booking channels ‘travel agencies’ for non-traditional channels ‘travel websites or supplier websites’ as it allows them to compare package and price easily.
Take a look at the finding of a recent study by comScore that elaborates on the changing trends:
- Gone are the days when a travel agent would book your summer vacation. Hotel guests are increasingly turning to suppliers' Web sites instead of travel agencies.
- Supplier websites account for 72 percent of online hotel spend as of first quarter 2008, a 3-percentage point increase in dollar share from the previous year.
- Hotel market share through online travel agency sites (e.g. Expedia and Orbitz) is now 28 percent, 3-percentage points down from a year ago. The results are summarized below.
Total U.S: Home/Work/University Locations
Source: comScore, Inc.
|
*Excludes auctions and managed travel.
- The increase in dollar share among supplier sites is being driven by several economy brands, such as Best Western (up 1.2 points) and Choice Hotels (up 0.6 points). Marriott, which includes both economy and premium brands, experienced the most significant increase of 1.3 points. Meanwhile, online travel agency sites lost dollar share as consumers booked directly on the supplier sites.
- “The current economy has many consumers and business travelers tightening their belts, and the travel industry is certainly feeling the impact,” said Kevin Levitt, comScore vice president. “Customers are becoming more cost-conscious, seeking modestly priced alternatives for their hotel stays.”
- Economy Hotel Brands Increase Paid Search Advertising in Down Economy
- Given the current economic conditions, some hotel groups are shifting their online ad dollars away from premium brands. Consider as an example the Intercontinental Hotels Group, which owns both premium and economy brands. Its economy brand, Holiday Inn Express, increased its total number of paid search link exposures by 16-percent, while its premium brands, like Crowne Plaza (down 41 percent) and Intercontinental (down 26 percent), reduced exposures.
Total U.S: Home/Work/University Locations
Source: comScore Marketer
|
"With consumers shifting their spending toward lower-cost alternatives, it makes sense that marketers would be shifting their ad spending accordingly to achieve better marketing ROI," Levitt said.
Hoteliers who wish to remain competitive in this slowing economy need to adapt and redistribute their inventory, if they want to continue to reach travelers easily and effectively. So the question of the hour is, ‘72% of hoteliers have redistributed their inventory and their ad spending. Have you?’
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