Hotel News Now published a story on “10 hotel booking trends” from a presentation at the inaugural Hotel Data Conference by Brian Ferguson, Expedia VP of Lodging Demand and Analysis. Hotel News Now is the newsletter publication of Smith Travel Research, a leader in hotel rate data and research for the hotel industry.
The consumer trend of the past year has been a swing in hotel bookings made through online third-party hotel reservation sites like Expedia, Travelocity, and Orbitz. The viewpoint of Expedia, expressed by Ferguson, is the increased volume in bookings does not directly increase profits for third party online travel agencies due to the lower revenue generated as a portion of lower room rates across all hotel market segments.
What I want to share is the “10 Booking Trends” discussed by Expedia’s Lodging Demand and Analysis VP. I am just a hotel consumer who tries to figure out how to get great value from hotel rates. Reading what the industry experts have to say helps me focus my Loyalty Traveler work on a targeted audience who will benefit from my reporting on hotel rate trends as a frequent guest.
1. Expedia VP Ferguson: Exchange rates are shifting travel patterns.
Hotel rates in UK have dropped primarily due to the better exchange rate for Americans. Combine the exchange rate with promotions and the UK is a bargain.
Loyalty Traveler: I totally agree, but the window appears to be closing on the exchange rate issue. Winter 2009 offered some of the best deals in years for UK and Europe due to the combination of a much better exchange rate for the US Dollar and hotel loyalty program promotions. The dollar has been losing ground as the stock market goes up. Anyone thinking Wall Street inflation?
2 nights for the price of 1 has been an ongoing deal for the past couple of years to entice travelers to the major chain hotels in Europe and Asia.
2. Expedia VP Ferguson: Consumers are looking for a deal. Bookings made with promotions are increasing as a share of total hotel reservations.
Loyalty Traveler: I’ll take some credit for this one. I take the time to analyze hotel promotions for readers. Loyalty Traveler rarely books a room without a promotion offer. “Hotel value for the frequent guest” is the Loyalty Traveler motto. 10,000+ unique visitors a month are reading Loyalty Traveler to learn more about hotel loyalty program promotions.
3. Expedia VP Ferguson: Promotions matter more than ever.
Loyalty Traveler: I get a chuckle out of all the news articles showing how to get better value from your spending in all segments of consumer purchases from groceries to hair cuts to travel.
I had an oil change yesterday for 25% off. The coupon took two minutes to locate on the internet. All the other people at Jiffy Lube paid full price.
Friends have commented I am a cheap ass when I pull out a 2-for-1 dining coupon. I rarely eat out for more than half-price.
I frequently stay in hotels for less than half-price. Promotions matter if you want more money for life’s other necessities and pleasures.
4. Expedia VP Ferguson: Promotions are getting more creative. It used to be about cutting rates and now hotels add free nights and value-added incentives.
Loyalty Traveler: Promotions are more creative and take more time to analyze for this Loyalty Traveler. I’m looking for the deal whether it is a bargain rate now (free parking, free breakfast) or will result in a bargain hotel rate in the future (free hotel night).
5. Expedia VP Ferguson: Customers who book online are trading up. Four and five star hotels are getting more affordable.
Loyalty Traveler: I have stayed in some of San Francisco’s finest hotels this year and only once paid over $125. And I received a $500 per night suite for that stay. 2009 is a leisure traveler’s hotel dream.
6. Expedia VP Ferguson: There are massive swings in online market share.
Loyalty Traveler: No real comment to make here. I haven’t tried the phone call reservation this year. I’ve read articles on Hotel Chatter and Budget Travel about people getting a much better deal through the phone. I’ve been an online customer for 10 years and my experience has rarely been to find a better deal over the phone. I do recall my mother getting good phone rates when my mom and the hotel reservationist could not locate the online promotion I was telling her to book.
7. Expedia VP Ferguson: Booking compression. People are waiting closer to stay date to book.
Loyalty Traveler: I reported in several posts that my rate analysis of San Francisco hotels revealed the lowest rates typically are found between 7 and 14 days before the stay date. Smart shoppers wait (or at least go with a rate allowing cancellation in case a better rate appears).
8. Expedia VP Ferguson: Leisure rates went down first and are going down more.
Loyalty Traveler: My hotel rate focus is geared for the leisure traveler. I don’t stay in San Francisco on paid rates when a convention is in town and the hotels go up to $300+ per night. The same hotel room is around $100 per night, a 50% decrease from average leisure rates a year ago, during weeks when business travel is light. And getting an upgrade is much easier when there are not corporate executives buying up the suites.
9. Expedia VP Ferguson: Increased use of rate fences in packages.
Loyalty Traveler: I am not a marketing person and I need to study this concept since I have been seeing it more frequently lately. Basically it seems the concept is to hide the room rate in a package of bundled services such as airfare, rental car, or hotel amenities like champagne and spa treatments.
I generally find these to be a poor value for a hotel when the components are broken down. Packages are convenient and there are some great deals if you need the car or the airfare. I think this is generally a better strategy for reducing high-cost airfare rather than getting a better value on a hotel room.
10. Expedia VP Ferguson: Opaque channels are growing faster than non-opaque channels.
Loyalty Traveler: Opaque channels are hotel reservation sites like Priceline and Hotwire where you get a really low rate for an unspecified hotel. Opaque channels are the way to go when hotels are priced at high nightly rates. I opt for Priceline when the alternative is a $200+ night room.
My basic loyalty traveler argument is over the course of the year when traveling and staying 20 to 50 nights in hotels, the hotel loyalty program strategy can be used as effectively as Priceline to pay for rooms when they are relatively low priced and redeem points for high priced rooms.
I have saved a couple thousand dollars in past years using Priceline for trips when the chain hotels were high priced.
2009 has seen incredible promotions from hotel loyalty programs. My Starwood Hotels stays in May averaged less than $60 per room night at upscale hotels, frequently in suites, while allowing me to book $500 per night rooms with the free nights I earned.
Try doing that with Priceline.