An eye-opening look at the changing face of the hotel industry and what lodging operators should be focusing on for a profitable 2016.
UNITED STATES – NAVIS, a leader in innovative hospitality technology solutions, announced five trends that are changing the face of the hotel industry and providing an eye-opening look at what lodging operators should be leveraging in 2016.
The travel world has undergone a substantial transformation in the last few years, and the technology that incited the changes is growing at a faster pace than most can keep up with. Marriott purchasing Starwood, Expedia buying HomeAway, Priceline‘s exclusive agreement with TripAdvisor Instant Booking, and Google‘s intentions to expand and improve Book on Google. To say the hotel industry is in flux is an understatement. To effectively map out strategies that will drive revenue goals for 2016, hotels need to be forward thinking about how the market is changing and how those changes affect marketing, services and operations. Here are five of the most important trends to keep tabs on.
#1 The Conversation About Who Owns the Guest Takes Center Stage
Hotels have little choice now regarding whether or not to distribute to online travel agencies (OTA’s). What is at stake, however, is ownership of the guest. Booking.com announced last year that it would cease to provide hotels with the guest’s email when it sends guest confirmation. When hotels do not have ready access to their guest data, and the OTA “owns” the guest rather than the property, it severely hampers the ability for hotels to capture new and repeat guests with the highest value.” Hotels require data to effectively market to past guests and access to this data will play a role in how hotels and OTA’s move forward. Train front desk staff to collect key data from guests at check in, and focus on growing the direct channel in 2016 to ensure that the guests are “yours” rather than the OTAs.
#2 Mobile Marketing and Mobile Commerce is Set to Revolutionize
In 2016, 51.8% of travelers who book trips via digital means will do so using a mobile device, according to eMarketer’s latest estimates of digital and travel research and booking. That will be up from 43.8% this year. Clearly, a robust mobile marketing plan is in order. This means responsive design, one-click booking, and location technology. Some hotels are surprised to hear that a comprehensive mobile marketing plan calls for integrating click-to-call campaigns. According to Google’s “The Role of Click to Call in the Path to Purchase,” 68% of hotel guests report that it is extremely/very important to be able to call a hotel during the purchase phase, and 58% are very likely to call a hotel if the capability is available in a smartphone search. Of those who are likely to call directly from search, 40% will call to make a purchase, and 50% will call to ask about promotions or incentives. Like other segments of the online marketplace, mobile is playing an increasingly important role in online travel. Guests typically take a cross-platform approach, so it is essential that hotels offer a seamless omnichannel experience before, during and after their stay.
#3 Market Share Shifts Mean More Competition
From 2014 to 2015 ADR grew 5.2%, RevPAR grew 7.2%, and occupancy grew 2%, according to a June 2015 PKF Hospitality Research report. However, supply in the top 59 metropolitan markets is projected to increase 3.1%, and hotels are beginning to see more competition from private accommodations, especially as vacation rentals and alternative accommodations become widely available across traditional OTA channels. The increasingly competitive market requires hotels to craft strategies around capturing more market share. Strategies include:
- Actively monitoring rates and crafting revenue management strategies that include alternative accommodations in your competitive set.
- Creating last-minute mobile promotions.
- Marketing to locals for staycations and to generate word-of-mouth awareness.
- Honing pre-stay service levels that will set your hotel apart from the competition. Well- trained reservations staff can substantially increase conversions while pre-stay email outreach will reduce the likelihood of cancellation.
#4 Guest Acquisition Costs Continue to Rise
OTAs are capturing increasing market share, and commissions are rising at twice the rate of revenue growth, according to the Hotel Asset Managers Association, and recently there has been concern that the Billboard Effect no longer exists. To offset rising commissions, hotels must shore up reservation sales to ensure that valuable phone channel reservations are maximized to the fullest. Based on an average of stay values, phone reservations bring in 38% more revenue than OTA’s and almost 9% more than web reservations. To ensure this voice channel reservation value is maintained, hotels should implement call tracking, regular coaching, and reward reservation agents with performance-based incentives.
#5 Understand How Travelers are Changing to Use Data to Put Their Needs First
Know your travelers. Last-minute trips are on the rise, and more people are planning on a last-minute trip in the coming year. The short local getaway and mini-vacations will continue to trend. Bleisure will continue to grow, according to Fortune, and we predict that multi-generational and multi-family travel will experience growth, as well. Look at historical booking data, tying bookings back to the keyword or search query that drove the booking. You have a goldmine of data ideally using a CRM that integrates data from a variety of both online and offline sources. With this data on hand, you can dig deep into your channels, guests, their behaviors, your reservations department, and revenue in order to develop a plan that is informed by real guests, tailored to weed out what hasn’t worked, and driven by what you know is profitable.
Conclusion
The stage is set for the hotel industry to have an outstanding year in 2016. All signs point to healthy demand and continued ADR increases. However, travelers have more options than ever before and a growing list of demands to be met before booking. At the end of the day, rates and service will go head to head as the deciding factors for travelers. Rate strategies can be automated, but service is an art-one that starts from the very first interaction.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.
She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
