Excerpt from CoStar
As some figures such as average daily rate and occupancy either surpass or inch toward pre-pandemic levels, hotel revenue managers say segmentation is shifting.
Hotel revenue managers discussed segmentation and the future of bookings the rest of this year and into 2023 in a roundtable discussion hosted by Hotel News Now at the Hotel Data Conference.
Market segmentation has become more blurred, making it harder to distinguish between business and leisure travelers, said Priya Chandnani, vice president of revenue strategy at Benchmark, Pyramid Luxury & Lifestyle.
“It’s confusing data at this point in time,” she said.
The segment shift isn’t a cause for concern, said Isaac Collazo, vice president of analytics for STR, CoStar’s hospitality analytics firm. Average daily rate won’t go down; rather it will return to a more normal growth pattern.
“It’s not that ADR is going to go backwards; it’s just that the growth rate is going to slow,” he said.
Collazo said he spoke with a meeting planner who told him 2023 numbers are “off the charts,” and that business travel is going to come back in a new way. Since more people are working remote, the need to gather together for in-person meetings across the U.S. has increased. Rather than an annual meeting, companies are opting for quarterly team meetings.
“It’s a shift. The way we think about corporate business is going to be very different in the future than what we did before COVID,” he said.
Chandnani said her company’s portfolio of primarily destination hotels is seeing a slowdown in transient demand, but it’s not unusual given the time of year. Group demand, however, is ramping back up, offsetting the downturn in transient travel.
“If we have that strong group base, and all indicators show that we do, we will continue to protect our transient rate efficiency and continue to grow it,” Chandnani said.
Linda Gulrajani, vice president of revenue strategy and distribution at Marcus Hotels & Resorts, said rate might move backward next year, but it will come down to mix. She agreed with Chandnani’s point that a strong group base protects transient rates.
“I am optimistic that transient rates will stay strong and that the group and business travel base will drive the ability to price transient,” Gulrajani said.
Gulrajani said the remainder of 2022 looks strong, with group demand continuing to pick up. She said Marcus Hotels & Resorts is getting some big, short-term group leads for the fall months, an indicator that people are just now starting to book for the upcoming season.
Although group demand is rising, Gulrajani said group rate is a cause for concern in 2023 due to bookings from past years being pushed back at poor rates.
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