RevMax Hospitality Consulting Services
Practical Strategies To Maximize Profits
  July 28, 2010
Greetings!

Just in case we thought we had the summer pegged ...........
The general wisdom (with spring colored glasses, I guess) was that transient demand, both corporate, and particularly leisure, would be the bright and hot spots this summer. Transient leisure certainly bailed out many hotels last summer. Well, we're sure getting the hot spots this summer, lots of them although transient traffic does not seem to be the cause.

New wisdom:
  • Overall transient demand is down slightly - 0.4% to be exact.
  • Leisure transient traffic is down 9.5% YOY
  • Booking pace from last month is down 19% vs same period last year. 
  • Business and group demand is up 7-9% from last year.
  • Group business demand is also on the rise.
So, all this is a positive indicator for the second half of the year - with corporate and group business on the rise, that's the market for fall and winter.

For your sales plans, it makes sense to increase your efforts in the corporate and group side - remember that RFPs are going to be starting in short order. While they will be forcing rate to stay the same or lower, and you may well need to accommodate, the fact that there is likely more demand is, in itself, a very positive expectation within which to make the accommodation. Likewise on the group segment front - more traction will be a bright spot for all! 
 

Rubicon: Stronger pricing conditions on the horizon

July 28, 2010
By Tim Hart
Hotel and Motel Management

Summer is traditionally a peak travel season for North American travelers. As we hit the midpoint of summer, we took a look at our demand data to see how summer travel is shaping up for 2010 compared to this time last year.

At first glance, we see that overall transient demand is down very slightly versus last year. Transient roomnights booked for June through August are down 0.4 percent. Demand pace, in the form of new bookings over the last month, is down more significantly, by 7.3 percent versus the comparable period last year.

Last year at this time, transient demand was showing some resilience. More specifically, it was transient leisure demand that surged heading into the summer, with leisure customers taking advantage of the deeply discounted rates hotels were offering. Summer leisure demand this time last year was up more than 10 percent, though leisure average daily rate was down more than 12 percent. This strong leisure demand cut into the occupancy hole left behind by the extremely poor performance of the business and group travel segments. In 2009, the business and group segments were down more than 20 percent heading into the summer.

A completely different story is unfolding this year.Leisure demand is down 9.5 percent year over year. The pace of bookings added over the past month is down by 19 percent over the comparable period last year. On the other hand, ADR for summer leisure reservations is up 2.6 percent. Some major leisure markets such as New York, Honolulu, San Diego, San Francisco and Washington, D.C., are seeing ADR gains well above that average. So, deals that were aplenty last year are clearly not as available this summer.

These stronger pricing conditions are the result of improving occupancy in the group and business segments. Business demand is up nearly 7 percent over last year. Group commitments for the summer are up 8.6 percent; group reservation pickup against those commitments is up 5.3 percent. With group and business travel back in gear, hotels have regained some level of pricing power. They seem to be using it.

This story continues to unfold. The industry would clearly like all three segments, leisure, business and group, to be strong and thriving. While sustained improvement of the leisure segment appears somewhat fragile and perhaps too dependent on low prices, the business and group segments are now leading the way toward recovery.

 


 

 
Sincerely,
 

Nagib Lakhani
RevMax Hospitality Consulting Services
(425) 677-7866