According to TravelClick’s North American Hospitality Review for December 2016, hoteliers have a lot to look forward during the year to come. The company is predicting a strong Q1 for the industry, with every travel segment benefitting from healthy year-over-year gains. Occupancy is projected to increase 5 percent during the first quarter of 2017, while average daily rates are expected to increase 3.2 percent.
The report refers to the growth experienced in Q4 2016 as “positive but tepid,” which is most likely a holdover from the uncertainty brought on by the U.S. presidential election. During this period, revenue per available room grew 2.8 percent and 3.3 percent in the group and transient leisure segments, but over the next 12 months transient bookings are expected to rise 4 percent year-over-year, while average daily rate for the segment will be up 2.7 percent.
“In Q4 [2016] we were seeing a flattening pace in hospitality, with group holding it back,” said John Hach, senior industry analyst at TravelClick. Hach pointed to the stock market’s post-election drop and then gradual recovery as an example of what the group bookings segment is currently experiencing. Group bookings are currently up 2.8 percent in committed room nights, while ADR for the segment is up 2.4 percent. “Looking at the impact we saw and the data, I think we were right. Group bookings were holding back before the election, but now booking pace rebounded.”
Hach said the biggest question facing demand in the industry for 2017 is whether business travel bookings pick up over the next 60 to 90 days. Hach is confident the segment is primed to deliver strong returns over what it saw last year, but he isn’t certain to what degree improvements can be expected. This is primarily because his sources of concern have shifted. Last year was host to near endless uncertainty as a result of the election, but the major risks associated with travel are, in Hach’s eyes, geopolitical.
“The ‘America First’ mandate means we have a lot to be optimistic about travel within North America, but the stronger dollar can be a little scary for international travelers,” Hach said. “The key message is to maximize your opportunities domestically and look carefully at incoming visitors from international markets.”
This tightening of international wallets is expected to hurt the leisure market more than business, meaning in some ways business travel is positioned to take center stage in capturing international dollars. “There are still some encouraging signs that business travel will see respectable increases over the next 60 to 90 days as well,” Hach said.
TravelClick’s report closed with a warning from Hach about improving differentiation in the market during 2017, a familiar message to be sure, but one he said he wishes to relay with increasing alarm.
“Brand segmentation is a real issue in the industry,” Hach said. “From a marketing standpoint, the need to stand out this year, to be authentic, has never been higher.”
Hach pointed to Marriott International’s massive umbrella that now covers 30 brands, as well as its desire to introduce more, as an example of how specific hotels are becoming at targeting travelers. Competition between hotels is expected to be fierce this year, and individual properties can’t afford to sleep on major aspects of the guest experience, from booking to checkout. Hach’s message is that if a hotel isn’t focused on its web presence, including imagery and guest reviews, it will be lost in the crowd.
“Consider what unique experience you can lay claim to at your property that people can enjoy and then come back to,” Hach said. “Take away other concerns, geopolitical, everything. Marriott/Starwood has 30 brands and a common loyalty program, and you have to stand out among that. The biggest marketing challenge in 2017 is the authentic guest experience.”