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Over the past six months, this column has focused mostly on hospitality technologies and issues that were triggered by COVID-19. Innovation has flourished during that time, from both established industry technology providers and from startups. At last count I had identified nearly 300 startups in the space since the beginning of the year, some of them with very interesting technologies.

As outlined in our previous article, cleanliness is dominating the headlines within the hotel industry, with a number of press releases on new initiatives from all the major chains. The landscape has transformed quickly, to help keep up with the standards this article will summarise the basic principles of cleaning and sanitisation of guest rooms and how that can be achieved quickly, easily and cost-effectively.

Decreasing Stress
Posted: 09/14/2020

Stress does not come without your invitation. It is self-induced by our perspectives of what is occurring in our lives. We all have stress, and the less of it, the more happiness you experience. Life is about living day to day.

When you are going to search “blog topic ideas”, it will not give you the interesting ones. The web is occupied with companies that have bigger budgets than you and can churn out the content every day. And if you are going to put your time into creating and promoting a blog post, and hope to get results, you need to figure out what you are best suited when it comes to the blog topics. So here is what the most recommend:

Writing this column every two weeks typically takes me on a journey of discovery. I learn about innovations, find new technologies, and look at a wide diversity of products. Inevitably this involves a lot of web research to identify both core technologies and applications, and the different vendors offering solutions.



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Adapting to the Changing Landscape of Group Demand Measurement; Part 1 of 3

09/19/2014
by Erik Browning

The hotel industry had a record setting year in 2013: It was the year of most rooms sold, highest rooms revenue, highest ADR, and highest RevPAR.  2014 is shaping up to be even better: Occupancy is projected to grow between 2.1 percent to 2.6 percent, and ADR is forecasted to grow between 4.2 percent and 4.5 percent.  In fact, in the United States, May 2014 RevPAR growth was a new record breaking 10 percent.
 
It has been well-documented that the stellar U.S. performance has been driven by the increase in the transient segment, but we are also finally seeing growth in group demand.  For example, the number of group rooms sold in June 2014 was 1.5 million more rooms than what was sold last June of 2013.  Exemplified in the table below, group occupancy growth is finally outpacing the growth of transient occupancy.  However, group ADR growth is only at 1.5 percent compared to the 4.2 percent growth of transient ADR. 

 

YTD 2014: Top 25 North American Markets

   

 

YOY Growth

Segment

Occupancy

ADR

Group

3.70%

1.50%

Transient

3.10%

4.20%

Source: Travelclick
 
With all of these positive indicators (record breaking performance, consistent demand increases, moderate supply growth and four years of positive RevPAR lift), why aren’t we seeing better growth in group ADR? Certainly some of this lack of growth can be attributed to group business booked between 2008 and 2010, the Great Recession.  However, the Recession cannot explain it all.  Let’s examine a bit more closely some contributing factors.

The most obvious reason for the lack of growth is the change in group dynamics: Meetings are getting smaller and shorter.  Back in 2005, group business represented about 39 percent of occupancy, and currently in 2014, it represents only 33 percent of the occupancy.  Another issue is the 12-month moving average of group demand change was in negative territory during the second half of 2013 through early 2014. This may have led some hotels to reduce group prices to be lower than what the market could probably have held.  These factors, and more, have made the group landscape more competitive. 
 
While there are various reasons for group ADR underperformance, let’s focus on how individual properties currently measure their group demand, the changes to group distribution, and then ultimately, the downstream impact on how they price group.

As noted earlier, until recently, group occupancy and group pace have been lackluster in the United States.  I can certainly empathize with the revenue management team during the group rate quotation process when the group pace has not been as strong as needed. At the same time, we have to recognize that most markets have already reached or surpassed previous peak occupancies.  Many markets have likely already hit their functional capacity with little to no space for additional occupancy growth.  For RevPAR growth to remain positive in the future, growth has to come in the form of ADR lift.  The prognosticators in our industry are all projecting 2015 RevPAR increases between 5.2 percent and 6.7 percent, with occupancy only contributing about 1 percent growth. 

Assuming that the transient ADR lift continues at the current pace of about 4.2 percent, transient rate growth will have to be even higher in 2015. More importantly, group ADR has to rise dramatically compared to the current growth rate of 1.5 percent to hit the overall RevPAR projections.
So how do we make this ADR lift happen?  In my next blog post, we are going to examine what is going on with measuring group demand and how you might be looking at it incorrectly. All of which could be leading to pricing decisions resulting in money left on the table.
About The Author
Erik Browning
Vice President of Business Consulting
The Rainmaker Group


Erik Browning is the vice president of business consulting with THE RAINMAKER GROUP. With 15 years of revenue management experience across a wide range of hotels in multiple destinations, including 10 years with Hilton Worldwide, Erik understands the hotelier perspective to help meet business objectives.

 

 
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