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People today expect to be connected always and everywhere; sometimes it’s hard to believe that there was a world before smartphones and Wi-Fi. In the time since Wi-Fi became ubiquitous in hotels, apartments, and public spaces, it has fueled the evolution of connectivity in a lot of ways. Just like Maslow’s hierarchy of needs, the most basic needs start at the bottom, and you can’t get to the next level without a strong foundation. 

By now, everyone is aware that hotel giant Marriott International announced on Friday a massive data breach that goes back more than four years and may have affected up to 500 million customers worldwide. 

After two years of preparation, the FlyZoo Hotel — a futuristic property that uses interactive technologies to do everything from greet guests to deliver room service — is ready for business. 

Mobile technology is fast becoming central to the entire travel experience. Consumers are increasingly using their smartphones to research trips, book accommodation, check in at the airport, and access their hotel room. But one of the next big roles mobile has to play in the travel process is mobile payment. The idea of an entirely cashless society might still seem some way off, but mobile payment is gaining popularity. As it becomes more widely used, its fast and frictionless nature will bring benefits before, during and after a trip. 

Digital marketing, also known as internet marketing, plays a significant role to boost hotel website traffic and online bookings. Recently, many big announcements were made in the digital industry, for example when Facebook introduced a new video format for marketers, or when Google announced a board core algorithm. If you are a new hotelier and want to stay ahead in the industry, then you should know what’s going on in the hotel digital marketing industry. 
 



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Always Be Prepared: How Hotels Can Proactively Prepare for the Next Downturn in Demand

11/03/2014

Throughout the last 15 years there have been two significant travel recessions, one occurring in 2001 and another in 2008.

What did both recessions have in common? Were they predicable events? And, what actions could hoteliers have taken to either avoid or withstand the steep downturn in demand that devastated thousands of hoteliers across the world?

Learning from The Past

In both 2001 and 2008, within a relatively short period of time, striking global similarities triggered two cataclysmic declines in travel demand.  In the early 2000s the Internet was coming of age. During this period there was unprecedented and often irrational Internet growth. It triggered an artificial bubble of speculative economic activity that was unsustainable. The tragic events of Sept. 11, 2001, and the subsequent collapse of the first Internet economy plunged the world into a recession that within months decreased global hotel demand by more than 40 percent.

Over the course of the next five years, world economies gradually recovered and regained the lost ground. However, much of the gain was created through the leveraging of personal and corporate real estate assets to artificially high levels. Oversight and management was complacent and not focused on the inevitable impact that the real estate bubble collapse would have, taking global markets once again another five years to recover. There were stunning similarities between the two recessions; both had sudden declines of more than 40 percent in global hotel demand and were followed by a five-year recovery period.

Managing in the Present

In 2014, there is a strong consensus that the last recession is finally over and we are benefiting from a cycle of growing demand.

(See Image 1 above: Source: TravelClick July 2014 North American Hospitality Review Report)

As of June 29, 2014, committed occupancy for the current and three future quarters is up 3 percent, compared to the same time last year. New commitments added over the last month (pace) are up 2.9 percent, and average daily rate (ADR) is up 4.1 percent, based on reservations currently on the books.

According to TravelClick’s forward-looking booking data, major hotel indicators are all pointing in a positive direction, especially regarding a full recovery of the group segment. This important segment serves as a strong foundation for hoteliers to grow average daily rate (ADR) and revenue per available room (RevPAR) at an accelerated pace.

To manage in the present, and to prepare for the future, the hotel industry must change its long-standing practice of judging market trends on historical information. Over the course of the past two decades, hoteliers did not have much choice other than to look to historical information to gauge demand, and develop pricing and marketing strategies to grow RevPAR.

However, within recent years, there has been impressive progress mostly at the brand level, of using real-time business intelligence to manage occupancy and ADR. This data can provide a clear picture of what occupancy, ADR and pace of reservations look like months out. It can help a hotel understand if their occupancy for the month ahead is up, down or flat year-over-year, and inform price, inventory and short and long-term marketing strategies.

This occurrence has been quietly reshaping the industry into winners and losers. Many hoteliers have not caught up, largely due in part to the rapidly changing competencies needed to take advantage of the new tools. We are presently at an intersection where we are moving from data into business intelligence.  A new skill set is required amongst revenue managers and marketing directors to take full advantage of the latest tools. Educational efforts and curriculums are being modified at major hotel universities to properly educate the next generation of hoteliers on the latest and greatest revenue management and marketing dashboards.

The key takeaway within the present state is to invest in forward-looking business intelligence solutions. And, a parallel effort must be simultaneously made to hire, train and motivate revenue management and marketing personnel to fully leverage the newest business intelligence and demand management solutions. Doing so becomes the cornerstone in preparing for the next market correction.

Preparing for the Future: Creating a Localized Competitive Advantage

Reading the crystal ball is the tricky part. The good news is there is an abundance of forward-looking business intelligence to make the crystal ball clear. The not so good news is that we cannot clearly determine the timing of the next market correction and how long it will last.

What is clear is that the hotel industry is dependent on robust business, leisure and global economies to drive demand. Understanding this is paramount, as hoteliers do not drive market demand, rather they fulfill demand within their local markets.

Having a thorough understanding on how travel demand is generated is essential to withstanding the impact of another global economic recession. While airlines and larger tourism organizations can stimulate travel, hoteliers rely on the fulfillment of demand within their local market place. In large metropolitan areas, studies have shown that a hotel’s maximum impact is generated within approximately five miles of its location. For medium and smaller markets, maximum impact is usually located within 15 miles of a hotel’s specific geographic location. The primary reason for highly concentrated demand is due to strong guest preference to stay nearby their place of business, or close to friends and relatives.

While promotional and value-added inclusions are vitally important in driving conversion, they are ineffective in determining whether or not a person is going to travel. However, when it comes to withstanding any downturn in travel, hoteliers who realize the need to create a localized competitive advantage are in a better position to effectively compete throughout recessionary periods.

Localized competitive advantages include taking a full inventory of a hotel’s unique differentiators such as its restaurant, meeting space and amenities.  Other best practices include creating compelling promotions, coupled with ongoing mobile Web optimization practices to ensure that inbound visitors and local residents are aware of the hotel’s full offerings.

Consistent use of forward-looking business intelligence, in combination with the above localized best practices, enables hoteliers to safeguard and protect market share. Rapidly emerging social and mobile channels provide additional insurance for hoteliers to engage and convert travelers, especially with Millennials and digital-native travelers.

For example, imagine that an unanticipated global economic event triggers a sudden local market currency collapse, creating a 30 percent decline in a hotel’s domestic room nights. Having access to an advance business intelligence product becomes instantaneously important for making local and international pricing and marketing decisions to replenish occupancy with minimal RevPAR impact.

While no one can definitively predict the next market correction, history has taught us that recessionary periods can be sudden, steep and last as long as five years. Now is the opportune time to invest in forward-looking business intelligence along with social and mobile optimization to ensure that your property is prepared. These practices are vital to maximize incoming demand utilizing a hotel’s localized competitive differentiators.  Taking action now enables hoteliers to effectively manage through the next downturn in travel whenever it may occur.

About The Author
John Hach
Senior Vice President, Global Product Management
TravelClick


John Hach has more than 30 years of travel industry experience. He currently serves as the senior vice president, global product management of TravelClick.

 
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