The Power of Package Bookings for Driving Hotel Revenues

Hotels are always looking for new ways to drive demand – and packages have been a solid vehicle to do just that. Packages, or combined hotel, airfare and/or car bookings, offer valuable benefits to hotels, as well as consumers, but there’s a lack of industry information around how hotels can strategically manage this demand. Between 2014 and 2015 alone, there was a four percent increase in the number of U.S. travelers booking packages, and with the largest U.S. traveler pool since the pre-recession peak of 20081, that demand is likely to continue growing in the years ahead.

Historically the traditional package booker was often a travel deal seeker. Today, budget and luxury travelers alike find package booking not only cost efficient, but time efficient as well. According to Phocuswright’s 2016 report, Destination Unknown: How U.S. & European Travelers Decide Where to Go, travelers who book complex trips like packages tend to take more trips and/or spend more than those who buy just a flight, hotel or other single component – and these complex purchases are on the rise in the U.S. With the continued growth of this category, hoteliers can leverage travel data and partnerships to enhance their offering and make package bookings a key component of their success.

To provide hotels with more actionable insights, Expedia took a deep dive into 12 months of its first-party data (Full year 2016), comparing package bookings to standalone hotel bookings from global points of sale inbound to U.S. properties. The findings? A wealth of information and opportunity that should be music to hoteliers’ ears. Packages are a great way to maximize revenue, secure longer booking windows, and minimize cancellations.

Packages Drive Increased Revenue

Overall, in full year 2016, Average Daily Rates (ADRs) – a common performance metric for hotels – for package stays were higher versus standalone stays by an average of 20 percent. This shows a substantial rate boost for hotels – and an incentive to include their hotels in package offerings.

One potential reason for package bookings delivering a higher ADR? Hotels offering deeper room discounts in package bookings may successfully upsell consumers on room type, due to the overall perceived value. For example, in Hawaii – where package demand is high – a package consumer typically books a higher room view type; an ocean view room versus say, a courtyard view room. While the ADR for an ocean view room may be more expensive than a courtyard view room, if the ocean view room is more deeply discounted as part of the package, consumers may be more apt to re-invest their package savings into a higher category room.

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