Rubicon Data Shows Demand Pace is Picking Up

  • Rubicon
  • 08.14.09
Demand pace has improved markedly, with new booking activity over the past month for the coming 12 months about even with that of last year, down only by 0.7 percent, according to Rubicon, a leading provider of competitive market intelligence and market analysis for the global travel industry.

Group pace was down 7 percent, but transient pace was actually up 2.7 percent.

Pace, in Rubicon’s reporting, is defined as the volume of group rooms blocked and reservations made during the prior four weeks for arrivals in the next 12 months.

“Changes in demand pace are the earliest indicator of what we should expect future occupancies to be,” said Steve Swope, CEO of Rubicon. “As we all know, occupancy changes influence average daily rate (ADR), and the product of occupancy and ADR is, quite literally, RevPAR (revenue per available room).”

According to the August issue of the IndustryIntel North American Hospitality Review, over the past 15 months, demand pace has been negative on a year-over-year basis. In fact, at the end of February of this year, demand pace trailed 2008 by 35.1 percent. In recent months, demand pace improved to approximately -15 percent to -16 percent. This stability in demand pace has resulted committed occupancy for the future 12-month horizon leveling off between -10 percent and -11 percent.

However, new booking activity over the past month for the coming 12 months is showing slight improvement.

“Transient demand for the summer peak travel season has proven resilient and apparently responsive to the favorable pricing and deals available to consumers. The strong recent transient pace dramatically narrowed the year-over-year shortfall of transient demand on the books from -10.9 percent to -3.5 percent,” said Swope.

Rubicon notes that, given the short transient booking window, most of that booked business is for summer peak hotel stays. Along with the strong demand, there is evidence that this summer’s transient booking window is even shorter than usual. As an example, transient stays booked in July for July were up by 17 percent over last year. “Hotels are making hay while the sun is shining. Let’s hope the good news continues past the summer peak,” Swope remarked.

The group segment is less prone to severe fluctuations given its extended booking cycle. Rubicon’s data shows that group sales in July (i.e., group pace) for the coming 12 months were down 7 percent compared to sales in July 2008. Last month, group pace was down 23.1 percent. Group demand pace is currently positive on a year-over-year basis in 10 of the top 25 North American markets including cities such as Toronto, San Diego, Tampa and Detroit. Swope notes that continued improvement in demand pace will begin to favorably influence future occupancies over the next few months.

However, the pace improvement does have a cost. According to Rubicon, the ADR for reservations in the coming 12 months is currently down by 12.4 percent when compared to last year. Last month this same figure was down by 11.4 percent. “This deterioration in ADR is not unexpected since occupancy shortfalls always put pressure on pricing,” said Swope.

Based on group sales and reservations on the books for the coming 12 months in the 25 markets covered by the North American Hospitality Review, Rubicon observes the following performance versus this same time last year:

 As of July 31, 2009
Total Committed Occupancy
(group block + transient reserved)
ADR (reserved)
RevPAR (reserved)

“While we still have a way to go to see year-over-year growth, the improvement in demand pace and occupancy for the coming 12 months is a very positive sign indeed,” Swope continued. “The industry seems to have moved from deterioration, to stabilization to modest improvement, and that is welcome news for us all.”

Rubicon offers one of the broadest and deepest collections of market insight in the travel industry today. A leading provider of competitive market intelligence and market analysis for the global travel industry, Rubicon integrates competitive market information into the business planning and revenue management practices of its customers. Its flagship product, MarketVision®, offers a comprehensive suite of services that address market positioning in terms of price, demand and channel. Rubicon's publishing arm, IndustryIntel™, provides insights from one of the world's largest repositories of future demand and cross-channel pricing data.

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