Rubicon Data Shows Hopeful Signs of Turnaround for Hospitality Industry

  • Rubicon
  • 09.16.09
A seasonal spike in demand is proving beneficial for the hospitality industry, but the late summer months are also showing potential for a much broader resurgence in overall demand according to Rubicon, a leading provider of competitive market intelligence and market analysis for the global travel industry.

September is showing positive year-over-year growth in the transient segment with occupancy up by 3.7 percent.

“While it is not clear if this occupancy increase is entirely attributable to organic growth or partly due to Labor Day occurring slightly later in the month than last year, it is particularly good news since transient guests have been booking much closer to their arrival date than they have in the past,” said Steve Swope, CEO of Rubicon.

According to the September issue of the North American Hospitality Review, overall group demand for the next 12 calendar months is still down by 12.6 percent, but the decline seems to have been arrested. Group demand has stabilized around a decline of 12.5 percent on a year-over-year basis, and last month, group demand was off by 12.5 percent. According to Rubicon’s data, when transient demand stabilized prior to beginning its slow growth, it was also in the 12.5 percent range.

Transient reservations made during the month of August for stays during August were up 20 percent over last year.

“August is not the first month in which this phenomenon has occurred,” said Swope. “We noted the exact same compression of booking activity in June and July. If the trend continues, the 3.7 percent year-over-year improvement in September could grow appreciably.”

While the positive signs of recovery over the past few months are clear, they are not across all segments of demand. A lingering concern is the level of demand represented by business travelers. In September and October, the weekend demand is strong – up by 11.3 percent – while weekday demand remains down by 1.5 percent. Weekday demand is of greater concern for the travel and hospitality industry. The two customer segments that represent the traditional business traveler, transient retail and transient negotiated, remain off by 17.5 percent on weekdays.

“The fall-off of pure business travel is actually less than 17.5 percent as some business travelers are trading down to the lower rates found in the transient discount segment,” Swope commented. Rubicon notes that the trade down of business travelers is responsible for limiting the weekday shortfall to only 1.5 percent, but it has also contributed to the decline in average daily rates (ADR); average rates for transient demand are down 16.2 percent year-over-year. However, Rubicon suggests that it is important to remember that revenue per available room (RevPAR) improvement following a downturn “must always be led by improving occupancy and followed by improving ADR.”

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 observed the following performance versus this same time last year:

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

“The improvement in leisure and discounted demand over the past few months, along with the stabilization of group declines, is moving in the right direction,” continued Swope. “More business from the business travelers will help ensure that the dark days of early 2009 don’t return and will help support the slow and steady increases in ADR and RevPAR that will follow.”

Rubicon offers some 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 premier product, MarketVision®, offers a comprehensive suite of services that addresses 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.

Rubicon's publishing arm, IndustryIntel® reports on the leading indicators of industry and market-specific performance. Monthly and quarterly reviews, based on group and reservation demand provided by major hotel companies and publicly available rates, offer an objective, accurate and timely outlook of the coming 12 months. Rubicon provides traditional industry benchmarks while demand is still building and actions can still be taken. IndustryIntel publications Empower with insight.

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