According to the latest TravelClick data launched early May 2015, Hotel bookings from individual business and leisure travellers spiked across a variety of digital channels in the first quarter of 2015, That includes bookings made through official hotel websites, online travel agencies (OTAs), and Global Distribution Systems (GDS).
OTAs (which include Expedia.com, Hotels.com and Bookings.com) experienced the greatest jump in bookings, with a 15.1 percent increase compared to the first quarter of 2014.
Reservations made directly through hotel websites also grew by 7.1 percent, year-over-year, while GDS bookings increased by 1.1 percent.
“Hotel Direct” reservations — reservations made via direct calls and on property — decreased by 8.4 percent, while bookings through hotel 800-numbers (the CRO channel) dropped by 6.1 percent.
But while bookings have increased the most through OTAs, hoteliers should still focus on GDS channels to boost ADR, according to TravelClick.
ADR will continue to grow strong across all distribution channels over the next two quarters of 2015, based on reservations currently on the books, according to TravelClick. As it currently stands, ADR will spike by 4.3 percent and 5.9 percent in the second quarter and third quarter of 2015, respectively.
By channel, ADR will increase by 5.1 percent through the GDS channel, 4.5 percent via hotel websites, 3.8 percent through the Hotel Direct channel, and 1.8 percent across OTAs.
“As we enter the peak travel season, the distribution outlook continues to remain consistent from last quarter with travelers continuing to gravitate towards digital booking engines. “It is evident that hotels are focusing on average daily rate (ADR) to drive revenue per available room (RevPAR) as they ramp up for summer.”
“As occupancy continues to flatten, utilizing distribution partners is becoming a key part of a hotelier’s strategy, making channels like the GDS even more attractive as it provides higher ADR than third party options, but the question should be , shall hotel calculate the optimal ADR or the net ADR ?.
Hotel Room Pricing Strategy vs ADR performance
Hotel room pricing is a difficult subject within the larger school of revenue management, and as such it has garnered much study over the years. At the heart of any pricing discussion is the balance between healthy average daily rate and high occupancy; the metric representing this balance is revenue per available room, or RevPAR.
Pricing strategies generally take three forms: those that try to maximize ADR, those that try to maximize occupancy and those that try to maximize RevPAR. Though each of these categories of strategy may be applicable in different situations, the only consistently workable pricing strategy is one that focuses on keeping RevPAR at a high, sustainable level.
On a property level, a hotel may be able to lower prices in certain circumstances to generate enough demand within a comp set to result in a net positive revenue outcome. However, because the rates are so transparent and prominent in current and emerging digital venues, by the time the competitors match the lowered rate, the first hotel that lowered its rates loses any benefit in terms of a demand bump and the entire competitive set may have a harder time increasing rates commensurate with the increased cost of doing business.
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