Strong Corporate & Rising Group Demand: what does this mean to you?
According to several articles published over the past 4 weeks on Q1 performance some interesting observations come to the fore with some interesting opportunities for planning the year ahead.
Corporate Transient Demand:
· Marriott's Q1 performance for North America: 5.8% YoY increase in revpar. Completed corporate negotiated rates show a high single digit % increase for 2011
· Hyatt Hotels Q1 transient corporate revenues increased 6% YoY
· Starwood Hotels for Q1: 4.4% rate overall rate increase with midweek occupancy demands approaching 2007 levels in gateway cities.
· Omni Hotels and Resorts: 5.9% rate increase Q1 YoY
Group Demand Increases of Q1
· Starwood: 35% increase
· Hyatt: 15% increase
· Omni: 20% increase in RFP inquiries.
· Marriott: group demand on the books is 10% higher
Leisure travel was the bright spot in growth last year - What's in store this year?
· At the start of summer 2010 leisure demand was projected to grow at approximately 4.4%: actual demand increased by 8.6%
· Leisure demand is projected to rise approximately 2.5% this summer: will it exceed projections? Comparable to last summer? Stay tuned.
· According to an article by Bobby Bowers of STR, average spend per trip is rising, implying that, amongst other factors, trips are getting longer with more nights on the road.
· The Global Business Travel Association estimates U.S. corporate spend to reach pre-recession levels during the latter half of 2012
· The Rubicon report:
o as of May 1, business demand (transient weekday retail and negotiated) for the top 25 markets for the summer (June, July, August) remains strong with reserved bookings up 8% and rate up 5% YoY
o For the balance of the year, pre-booked business demand is up 8.9% at 4.4% higher rate YoY
So how can we take advantage of these expectations?
· A summer with potentially softer leisure demand compared to last year: while still growing, the pick-up will likely be softer and the booking window shorter - meaning build a weekend base more quickly and manage revenues closer in.
· A summer with stronger midweek demand: hold on rate for corporate transient and train your front desk to upgrade; an additional $10-$20 will be easier to obtain at check in for a larger/upgraded room.
· With longer corporate stays, watch your shoulder days - Monday and Thursdays - they may prove stronger than you expect so provide for sell-throughs and oversells on your peak corporate nights of Tuesday and Wednesday. This is an opportunity to make up on revenue.
Any way you slice it, it should be a good and strong summer! Good luck!
