Airline Traffic Improving After 18 Months

Airline companies have a reason to be happy. After more than a year of travel slump and losses, it seems like the travel industry is picking up again. Traffic, which is measured in miles, only declined by 1 percent for the month of November. Even if the figure isn’t yet out of the red, it is definitely a good sign. In fact, Southwest posted a 12 percent increase while Continental’s improved by 2.8 percent.

Individuals involved in the hotel revenue management can heave a sigh of relief. According to Robert Mann from the RW Mann & Co, this development is encouraging because “What we need is people back working and able to spend on air travel, and businesses profitable and willing to invest not only in jobs but in travel”.

In addition, the Bloomberg US Airline Index has improved 20 percent since Nov. 27. Meanwhile, William Greene from Morgan Stanley recommended airline stocks in December 2, 2009. These indications point to the fact that the travel slump might be over.

The Demand is Present

US airlines are preparing for an improvement in the industry. Hotel revenue managers and yield management teams would be wise to follow suit. Southwest has already filled 76.5 percent of its capacity in November; this is mostly attributed to lack of fees on the first two bags. Their promotional fares help push matters further. United Airlines, for its part, is intending to order wide-body jets to refresh its fleet. Delta Airlines also believes that the demand is there. And that it will improve more as the economy recovers.

Airline statistics is a significant aspect in predicting trends in the travel industry. Being able of these developments will help increase hotel sales and boost profitability.

Improving Hotel Sales through Mobile Marketing

The popularity of mobile marketing is undeniable. The travel sector would be wise not to ignore this. Consumers are now more reliant in the internet and mobile technology than ever. Aside from the rise of smart phones, users are also connecting to the internet via other types of devices. The fact is, the world is getting increasingly connected every single day. The internet has become a part of everyday life.

A user uses mobile internet when searching for a place to eat, sleeping accommodations, or attractions to visit. In fact, they even pay bills through mobile banking. If hospitality revenue managers take advantage of this phenomenon this early, they might reap the benefits of it later on. There are a number of people in the hotel revenue management field who are taking the hint.

The Hilton Hotel Group, in particular, is interested in this concept. It has already unveiled applications in its different brands including Conrad, Doubletree, Embassy Suites, Hilton, Hampton Inn, Hilton Garden Inn, and Homeworld Suites. The iPhone application contains the “Request upon Arrival” feature which lets guests ask for room service upon their arrival at the hotel. It also features the “e-check-in” which lets travelers check-in remotely 48 hours in advance. For skeptics of this tactic, it should be noted that the group already experienced a 59 percent increase in their mobile revenues (1st quarter of 2009).

Meanwhile, the role of social media should not be underestimated by yield management teams. Already, there are 65 million people accessing Facebook through mobile devices. The same can be said about MySpace and Twitter. These are important mediums because people connect through these social networks for information and tips.

The figures stated above are on-top of desktop internet users. To effectively boost profitability from these trends, it might be wise to adopt a mobile-specific strategy to target this segment.

Effective Hotel Revenue Management in Difficult Times

In spite of Americans’ fondness with traveling, the difficult times inevitably dampen their holiday plans and affect hotel yield management. Based on the results of a Maritz telephone survey (Oct. 2009), it seems that holiday travel plans will decrease dramatically this year for the first time in about a decade. Aside from the economic downturn, concerns about the H1N1 virus are also making a lot of people wary. As a result, more travelers are staying put instead of having a vacation.

Optimists believe that the hospitality revenue management industry will see an upward trend in 2010. However, there are several considerations that should be given a deeper look. One is the unemployment rate. People won’t get jobs overnight. According to the people surveyed, they were actually personally affected by this trend because 14 percent reported that a person in their immediate household was laid-off due to the financial crisis.

In addition, it is doubtful that the unemployed will get a suitable job in the future because companies are making do with less manpower. Until such a time that companies experience dramatic growth, they will hold back on hiring. Related to this trend is the decline in business travel. Business travel is also down or is reigned in since more companies believe that it actually hinders productivity. There are many collaboration tools that make cooperation among top executives and team members possible without physically meeting.

Despite all the changes in the yield management dynamics, it is possible to increase RevPAR. In fact, there are establishments that are still thriving either because a good strategy is implemented or because the hotel revenue manager understands where to position the hotel during the crisis.

Travelers Skip Expensive Rooms, Goes for Bargains

The largest hotel chains in the world were significantly affected by the severe declines in economic activity. With this development, it was only to be expected that they will do something about it. Travelers need not wait long. Hotel yield management teams have already cut their rates, offered highly discounted packages, and even established boutique hotels for budget-conscious travelers.

Take Starwood Hotels & Resort, for example, it charges $399 up to $639 a night. But their boutique hotel is charging only $119 a night. Another hotel chain, the Intercontinental Hotels Group, is following the same tactic. Both companies want to profit from the successful formula in the 1980s when individual properties offered quirky interiors and luxurious facilities to frugal guests. But while in the past, the formula was done to generate attention; it is gaining popularity now because of desperation. The global crisis left majority of travelers unwilling or unable to spend on their vacations.

According to PricewaterhouseCoopers, the top four hotels in the United States experienced 16 to 22 percent decline during the first nine years of the year. The unemployment rate is much to blame for this decline. In addition, the firm expects room rates to fall until 2010 as hospitality revenue management teams try to entice wary consumers. Other reasons for the significant decline include:

Executive Compensation Backlash

The lavish spending by financial firms, high executive compensation, and excessive risk taking is getting a backlash from the public. And almost all big companies are affected. Hotels that had previously focused on business travelers are left with facilities they cannot use and amenities no one wants to pay for.

No-Frills Accommodation

As a result of these developments and more, hotel revenue managers are trying to cut costs. In many hotels, the mini-refrigerators in the rooms are left empty. Even the shampoo and shower gel are attached to a dispenser in the wall. Faced with this type of competition, the hotel revenue managers in many high-end hotels are joining the bandwagon or coming up with ways to retain their market share.

Hospitality Management: Acknowledging Customer Life Time Value

Hotel marketers have long since known about Life Time Value (LTV) and they have worked hard to gain the loyalty of high-value guests. In an increasingly connected marketplace though, the playing field is shifting. In essence, LTV is simply blocks of income that the guests generate for the hotel over their course of their relationship. Yield management revenue comes from the initial stay, the services paid for, and additional products purchased.

Aside from this, the guest also provides good feedback and repeat purchase lessens the cost of acquiring new customers. For every first-time guests that becomes a customer, there is already a cost associated with acquiring that guest. And there is a potential loss to you if the guest is unsatisfied with the accommodations offered since they will seek alternatives and advice against your hotel.

In order to avoid disappointments and boost profitability, here are some hospitality revenue management tips that will maximize the customer life time value:

Strive for Excellent Service Levels on the Internet

For many hospitality revenue management personnel, the internet is seen as a way to boost profitability. As a result, the focus is mostly on marketing instead of customer service. Well, online service shouldn’t be overlooked because it still reflects on the hotel. Make sure that the same level of service provided at the hotel is available on the internet.

Provide High-Quality Front-Line Service

The front-line staff is your direct link to the guests. The hotel revenue management team and executives might be committed to the hotel’s success and the marketing might be brilliant, but all these are for nothing if front line service is poor. The staff needs to be motivated, monitored, and improved wherever possible. They should be trained in customer service because potential damage can result from poor reviews.

Lastly, it should be noted that in order to increase hotel sales, the hotel should continually reinvent itself to suit the changing needs of its guests.

Hotel Revenue Managers Try New Strategies

If there’s one thing that differentiates Kimpton Hotels, it is their attention to detail. In today’s cutthroat competitive environment, every customer counts. But it is also important to realize that some guests count more than others. Take Greg McHale who spends 60 days in a year traveling. When he checks in at this hotel, he expects Diet Pepsi, Snickers bar, or even a disc of his favorite music at his room.

Some hotel revenue managers might think that this is overkill, but for Kimpton Hotel, it is a very small price to pay to get the loyalty of Mr. McHale. It may be far-off before majority of hotels goes to such extent but an increasing number of them are taking notice. In fact, they are forced to be innovative and creative in their strategies in order to retain customers. Hotels have become especially vulnerable during the tough times. Their branding has become second to the practical concerns about increasing hotel sales and boosting profitability.

Right now, you can already see some of these strategies into effect. Among the deals hotel revenue managers came up with include: upgrades, extra nights, and loyalty rewards. Even high-end chains are giving a lot of freebies including free internet connections, complimentary breakfast, and late checkouts. Aside from business services and packages, a number of hotels are also trying to entice travelers by subsidizing their meals, offering complimentary dry cleaning, and in-room spa.

Through all these, hotel rates in most high-end hotels remain steady. This is no easy feat for the hospitality revenue management staff because occupancy rate, as of October, was down to 58.1 percent while per-room revenue is down to $57.57.

Some business travelers are responding to these offers. But overall, they are still listening to the higher up who tells them that “every penny counts”. There’s no reason to stay at a Hilton Hotel when the one at the other end of the road will do just as well.

5 Things to Keep in Mind about Social Media

Because social media is a new phenomenon, a lot of hotel revenue managers fail to understand its implication to their business and profitability. As a result, they are unable to utilize its features and fulfill its potential. To help hotel revenue management teams make the most of its possibilities, we have compiled a few things to keep in mind:

Content is King, but…

Informative, readable, and relevant content is still highly important in all forms. Whether it is a blog post, website content, images, whitepapers, and podcasts, companies need to project themselves as an expert to boost profitability. After content though, there should be continuity. Sharing and community should come next.

Not All Social Networks are For You

While it might be tempting to create an active presence in all networks, it isn’t really necessary. Your target market is most likely frequenting a few of them, but not all of them. Just be on the social network that counts, it works just as effectively with less effort and expense.

Entice the Market to be heard

Social media is all about sharing, participation, and community. Don’t be a “glory hog” because it will just turn people away. Instead, give freely, expect results, and gain the respects of your market.

Be Transparent

In today’s jaded world, saying that you are “transparent” or “authentic” seems superficial. But this is exactly what you need to do and practice in social media. People respond to openness, if you’re not real, you’re out.

Helpfulness Goes a Long Way

Give away information and ideas freely to your target market and they will respond. Hospitality revenue management teams need to realize that helpfulness goes a long way in an online community. Aside from building credibility, people also respond when they know you care.

PwC Downgrades Hotel Revenue Expectations

Although there are signs of economic recovery as well as indicators that the demand for lodging is going up, PricewaterhouseCoopers placed its expectations downwards. The firm expects that demand for US lodging won’t increase for next year. This spells trouble for hotel revenue managers who are already struggling to breakeven at this stage.

For 2009, PwC projects that revenue per available room (RevPAR) to drop as much as 16.4 percent. Meanwhile, the average daily rate is expected to drop 8.8 percent against the period of 2008. Many already expected a downtrend. However, PwC’s current forecast is bigger than the 16.1 percent and 8.7 percent it projected on September 10.

Both the above-mentioned metrics will move downward until 2010. On the other hand, occupancy rate is expected to recover next year. The increase will not be high though because from an occupancy rate of 55.2 percent for 2009, it might go up to 55.8 percent next year. For hotels to survive or even thrive, many hotel revenue management teams are stepping up their online initiatives.

In addition, many are trying to eat up the market share of their competitors. Getting hospitality revenue management software that can predict demand can also boost profitability within the travel industry. Software programs such as RevPAR Guru can help greatly in this regard because it has a variety of functions.
According to Scott Berman from PwC, “To what degree the industry experience recovery is predicted on an improving economy, which facilitates lodging demand growth and operator’s abilities to achieve higher pricing.”

Negotiating Next Year’s Rates: What is to be expected?

Within the hospitality industry, a lot of eyes are looking into what will be accomplished by travel management companies as they negotiate with airlines and hotels on behalf of their corporate clients. This negotiation is an annual process; it encountered some troubles last year as the economy collapsed and dragged down hospitality revenue management with it.

The question in everyone’s mind is how low will the hotels are willing to go and whether these rates will stick throughout the year no matter the economic conditions. It should be noted that the rates were renegotiated many times over last year because of economic instability. At the moment, it is expected that travel management companies are at an advantage over hotels.

Because there is huge inventory within the hotel revenue management field, many yield managers are willing to drive the price down. There is a lot more supply than demand in a significant number of destinations. However, travel management companies might not have as much luck in dealing with airlines. This is because carriers can dramatically cut back on capacity easily. In fact, a lot of American airlines have already done so leaving travel companies with little wiggle room.

Some expects that when it comes down to it, travel management companies may get certain allocation for upgrades and frequent-flier programs. Waiving the fees for baggage and availing of more free services may also be possible. No matter what the incentives are though, the fact remains that too few people are traveling because of financial difficulties.

Corporations are still cutting back on travel expenditure and will continue to do so for some time. Yield management strategies have no room for mistakes or any other errors because the strategy can either improve hotel sales or drive it into the red. The hotel revenue management strategy needs to be planned carefully for it to succeed.

Digital Media: How It Affects the Hotel Industry

If there is a time when the impact of digital media is felt the most, it is now. With the decline in the economy, the popularity of online travel bookings, and the rise of social media, 2010 is bound to shape customer behavior and how they utilize new technologies. Hotel revenue management teams need to be aware of these changes in order to survive and compete in today’s dynamic environment. Among the digital trends to be expected include:

Cloud Computing

Literally all techies would have heard about cloud computing right now. If they didn’t, they would still have an idea about what it is. Open source software are generating revenue because of the cloud computing. And as technology giant such as Google, Microsoft, and Yahoo focus more of their efforts into making cloud computing more sophisticated, people will be more inclined to take advantage of services through the internet. Hotels that are ahead of the game can increase RevPAR and improve hotel revenue.

Social Media Replaces Email

Social networking websites such as MySpace and Facebook are replacing personal email as the preferred medium of communication. Messages are transmitted through the “personal message” feature of these sites. This feature is gaining popularity right now because of its ease and convenience. As of right now, there is not yet that much deluge of spam compared to personal email. Plus, people like it because their friends are there with no address book needed.

Mobile Commerce

Mobile commerce has been tantalizing everyone for a long time. Yet, it actually hasn’t reached its full potential yet. Aside from the fact that a lot of people around the world still don’t have access to mobile internet, there is also the issue of ease of use. The latter is being resolved through the development of various mobile applications. Hotels can benefit from this trend and boost profitability if they act early.