New committed bookings are down, according to a new report from TravelClick, but group business performance remains a bright spot. TravelClick’s March 2017 North American Hospitality Review found that new commitments added over the past month are down 1.6 percent compared to the same period last year, while committed occupancy for Q1 through Q4 2017 is down 1.2 percent year-over-year.
“We were anticipating a slight contraction, so we’re not surprised by the weakening reservation pace,” John Hach, senior industry analyst at TravelClick, said about the report. “This is turning out to be a challenging year, and it’s the first year in the past five years where we have seen a contraction in this area.”
Hach said hotels are doing a good job of increasing average daily rates at small levels and maximizing revenue per available room, but re-iterated statements made leading up to this week’s report that the growing group segment represents untapped wealth for many hotels. The report found average daily rate for the group segment was up 3.5 percent while occupancy was up 1.5 percent year over year. Overall ADR for groups is also up 2 percent based on reservations from March 2017 through February 2018, with 21 of the top 25 North American markets showing growth.
“[Hotels] need to aggressively seek these groups, even smaller groups,” Hach said. “There are pockets of opportunity all across the country, especially when a market is not already selling out to a major group.”
Long-Term Effects
Considering the unique, confusing makeup of this current cycle, Hach said it remains to be seen if these numbers represent a low point for the near future or a shifting of guest priorities over a short period. Furthermore, some of the most profitable group business that takes place in the industry comes from international visitors, and Hach said the possibility of a third proposed travel ban could do more damage.
“International travelers want to be welcome and safe in their destination,” Hach said. “They want to get in hassle free, and there is some concern with regards to pending bans and what we are seeing with weakening demand in other segments. If another ban pans out, there could be a prolonged decline impacting 2017 and 2018 as well.”
In the short term, Hach said the biggest thing hotels can do is provide greater education and brand awareness to bid for groups. The two words he wants the industry to repeat are: Visibility and differentiation.
“It’s not that final click that creates a booking, it’s the discovery of a destination that lingers within a traveler,” Hach said. “It’s difficult to justify spending here sometimes, but visibility is more important than ever.”