Over the last two years, hoteliers saw increases in demand across all the customer segments and this in turn led to healthy increases in hotel room pricing. While rates haven’t quite returned to pre-downturn levels, current pricing trends continue to move in the right direction.
Reservation activity data over the past few months for the transient segment shows a booking curve that is shifting up. Travelers are making reservations earlier than they did a year ago. These early gains in reservation activity on a year-over-year basis may not hold up all the way to the arrival period. It remains to be seen if this behavior is temporary and limited to market uncertainties, such the resolution of the fiscal cliff.
For the first three quarters of 2013, group commitments are about flat compared to the same time a year ago (up 0.1 percent). New group segment sales pace for 2013 (which is new group commitments over the prior 30 day period) has slowed down or declined over the past few months. Again, it is unclear at this point if this is merely a pause in group activity during a brief period of political and economic anticipation.
Along with forward looking bookings and group commitment data, the prevailing pricing and trends for future arrival periods provide key leading indicators of anticipated demand and sentiment of the hoteliers. Using its rate comparison tool, TravelClick determined the prevailing pricing for the top 10 North America markets for the first half of 2013. The pricing is an average of available rate products across all hotel segments for the three distribution channels: global distribution systems (GDS), Brand.com, and online travel agencies (OTAs). The metro markets included are Boston, Chicago, Dallas, Los Angeles, New York, San Francisco, St. Louis, Tampa, Virginia Beach, and Washington.
The results show a continued upward pricing trend through the first half of 2013. While these are long term pricing averages, the trend indicates a positive and optimistic sentiment on the part of hoteliers in these markets and the expectation for the price gains over the past two years or so to continue into 2013. It is also worth noting that in the last quarter of 2012 the pricing level dipped noticeably month over month, showing a downward adjustment based on recent demand indicators and new sales pace.
The accompanying chart shows the year-over-year position by market of committed occupancy, reserved occupancy, average daily rate (ADR), and revenue per available room (RevPAR), based on business on the books for the future 12 months. Committed occupancy is group blocks plus transient reservations. Reserved occupancy, ADR, and RevPAR are based only on reservations (group pickup and transient reservations). Shades of green indicate highest performance of the markets, while shades of orange indicate average performance, and shades of red indicate lowest performance.
Prevailing market prices and trends over the past few months throw light on key pricing performance indicators as well as reflect the sentiment and optimism of hoteliers in key North America markets.
Rao Avasarala is vice president of business intelligence at TravelClick, a global provider of revenue generating solutions for hoteliers.
