Today, hotels are battling it out on numerous fronts to keep themselves ahead in a constantly challenging marketplace. Increased industry competition, the growth of the sharing economy, and the need to lower rates to attract price-savvy consumers are all taking their toll.
However, hotel marketers are finding that by investing in their direct booking channel, it’s more than possible to not only survive, but thrive in the face of these testing market forces.
The following post outlines some of the biggest threats hotels face right now, while diving into a variety of actionable tips that can help boost direct bookings and increase overall profit margins.
Market factors hurting business
Diverse and often complex, the current challenges within the hospitality industry require that hotel marketers are more resourceful than ever.
Competition has been growing rapidly from all corners over the past decade, including a surge in domestic hotel construction projects. In December 2016, the number of properties Under Contract in the US rose by 19.4% year-on-year, while the number of hotel rooms in the US is predicted to rise by 25,000 rooms in 2018.
This level of growth puts hotels in an all-out race to the bottom for room rates. Driving down rates represents the easiest way to stay competitive and stave off increased inventory levels. But the trade-off with this approach is a heavy and sustained impact on a hotel’s bottom line.
Pressure has also come from the rise of sharing economy accommodations, most notably Airbnb. While recent figures suggest it isn’t stealing the level of market share many first thought, Airbnb’s presence clearly remains a challenge to hotels.
Beyond these internal industry trends, unpredictable external factors such as the weather, disease, and societal events can cause disruption on a local and regional level.
For instance, the presence of Zika in the Southeastern U.S. had a negative impact on hotel bookings for 12-18 months. Terrorist attacks in Europe, shootings in New Orleans, and the Ebola outbreak in Africa have also had their own impact on the industry, leading to plummeting visitor numbers.
Yet in the face of these distinct challenges, every hotel can thrive by becoming more independent and focusing on pushing more profitable direct bookings.
