Current Outlook - May 2014
The hotel industry outlook for the top 25 North American Markets is showing an increase of 4.9% in committed occupancy for May 2014 - April 2015. This is compared to the same time last year and is based on group commitments and individual reservations on the books as of April 27, 2014. The group segment is up 4.7% in room nights committed (contracted), and new group business added over the last month (pace) is up 3.0% over the comparable period last year. Additionally, transient room nights booked are up 5.2% compared to the same time last year, and average daily rate (ADR) is growing slightly above occupancy, up 3.4% based on reservations currently on the books.
For the second quarter of 2014, overall committed occupancy is up 3.8% in the top 25 markets. Committed occupancy for the group segments is up 2.7% and the transient segment is up 4.6% compared to a year ago. Average daily rate for the second quarter is up 2.8% over the same time last year. Business segment ADR, which includes weekday transient negotiated and retail segments, is up 3.2%. Leisure segment ADR, which includes transient discount, qualified and wholesale segments, is up 5.0%.
Sneaking a Peek at the Summer Peak
After a rather hard winter in much of the US, the summer season is fast approaching. Let's take a look at how demand for the summer months (June - August) is shaping up.
Overall, year-over-year demand growth for the summer period is strong, with occupancy on the books up 4.8% versus the same time last year. Overall ADR growth is somewhat tepid at this point, up 2.7%. The group segment is up 5.0% in occupancy, although ADR growth for the group segment is flat. Transient occupancy growth is tracking up 4.4%, while transient ADR is up 4.2% based on reservations currently on the books.
Focusing on leisure demand, consisting of the transient discount, qualified and wholesale segments, occupancy on the books is up 4.2% and ADR is up 5.3%. More than half of that leisure demand comes from the transient discount segment. The discount segment, in particular, is up 8.8% in room nights booked, and 7.5% in ADR. This discount segment drives leisure demand and can be considered the bell-weather for the performance of the leisure segment.
Though the leisure segment gets more focus during the summer, the transient business segment is also looking strong. Transient business consists of the transient retail and negotiated segments. Room nights on the books for these segments are up 3.5% year-over-year, and ADR is up 2.8%.
Returning back to the leisure story, we can also see where the leisure growth is coming from, in terms of booking channels. Nearly 40% of leisure demand is booked through the brand.com channel. Year-over-year growth in brand.com leisure room nights is up 4.8%. As one would expect, a key booking channel for leisure guests is the online travel agencies, or OTAs. Nearly 25% of leisure demand is coming from the OTAs. Leisure room night growth through the OTA channel is up 36.1%, with ADR growth of 8.1%.
We can also drill down one level deeper into this OTA growth to determine which agencies are driving the strong performance. Over 80% of the OTA room nights on the books are coming from Expedia (and its affiliated sites Hotels.com and Hotwire) and Priceline (including the Priceline and Booking.com consumer sites). Room night growth for the Expedia sites is up 36.9%, with ADR growing 8.9%. For Priceline, more than 90% of its demand is coming from the Booking.com site, which has seen a 70% increase in room nights booked for the summer months over this time last year.
While the OTA channel continues to deliver a large portion of the leisure demand, it is important to consider the booking behavior of loyalty program versus non-loyalty program guests. Approximately 40% of the room nights on the books for the coming summer are from members of the frequent guest program and almost 60% are not members of the loyalty program. For those loyalty program guests, two thirds booked through the brand.com channel, and virtually all others booked through another hotel direct channel (voice, direct to property). Conversely, for those non-loyalty guests, 40% booked through an OTA. So, the challenge remains for hotels to convert those first-time leisure guests booking through OTAs to guests who are loyal to their brand and members of their loyalty program. The payoff through improved market share and lower distribution costs is high.
The chart below shows the year-over-year position by market of committed occupancy, reserved occupancy, ADR, and revenue per available room (RevPAR), based on business on the books for the future 12 months. Committed occupancy is group blocks plus transient reservations. Reserved occupancy, ADR, and RevPAR are based only on reservations (group pickup and transient reservations). Shades of green indicate highest performance of the markets, while shades of orange indicate average performance, and shades of red indicate lowest performance.
TravelClick Perspective May 2014.pdf
About TravelClick, Inc.
TravelClick (TravelClick.com) provides innovative cloud-based solutions for hotels around the globe to grow their revenue reduce costs and improve performance. TravelClick offers hotels world-class reservation solutions, business intelligence products and comprehensive media and marketing solutions to help hotels grow their business. With local experts around the globe, we help more than 36,000 hotel clients in over 160 countries drive profitable room reservations through better revenue management decisions, proven reservation technology and innovative marketing. Since 1999, TravelClick has helped hotels leverage the web to effectively navigate the complex global distribution landscape. TravelClick has offices in New York, Atlanta, Philadelphia, Chicago, Barcelona, Dubai, Hong Kong, Houston, Melbourne, Orlando, Shanghai, Singapore and Tokyo. Follow us on twitter.com/TravelClick and facebook.com/TravelClick.
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