Current Market Overview

As of October 2011, committed occupancy for hotels in the top 25 North American markets is showing an increase of 4.8% year-over-year (YoY) for the next 12 months. This improved demand is led by an increase in group commitments of 5.4% YoY, followed by transient demand up 3.1%. The overall average daily rate (ADR), based on reservations on the books for the current and future three quarters, is also up 4.0% compared to the same time last year. Group ADR improved 2.2%, while transient ADR has grown 5.3% YoY.

Shawn Flanagan
Enterprise Solutions Manager

The top 25 markets are showing improvements in demand and rate for Q4 2011. Overall committed occupancy has increased 3.6% YoY, with ADR holding strong – up 4.1%. At this point in the booking window, Q1 2012 committed occupancy and ADR are showing modest YoY gains of 2.4% and 2.8% respectively. Revenue per available room (RevPAR) is showing YoY increases of 4.6%, 10.8%, and 7.1% for the months of October, November, and December respectively.

A profile of the top five performing markets in North America

One key performance metric that hotel companies frequently use to define success is RevPAR. This month we are taking a closer look at the top five performing markets in North America for Q4 2011, based on transient RevPAR performance. Good RevPAR performance typically results from strategic actions at the detailed level of segment and channel, in addition to strong demand. The objective of this analysis is to look at the detailed profiles of these top five markets to understand how segment and channel mix impact or influence RevPAR performance, specifically for the transient segment.

The top five markets in North America for transient RevPAR performance are:

These five markets show strong double digit RevPAR growth driven by a combination of improved demand and ADR increases. As expected, these markets show a good balance between increased demand and ADR growth. However, there are key insights to be gained by looking at the mix of segment and channel activity.

The key themes from these top five performing markets are:

·         Market Segment Mix

o    Decreases in transient qualified business across the markets

o    Decreases in transient discount business across the markets (with the exception of Honolulu)

o    Transient retail pricing power

o    Traditional leisure markets Honolulu and Miami are showing significant activity in wholesale demand, but only Honolulu had a corresponding increase in ADR for that segment  

·         Channel Mix

o    Significant increases in ADR for OTA and GDS channels

o    Small and/or declining OTA share of room nights

·         Pricing

o    Strong ADR growth in the OTA channel

o    Significant increases in other segments like retail and qualified

Overall, it is interesting to note that the distribution of demand across the segments and channels is fairly consistent compared to last year, with the exception of the variations outlined above. By analyzing activity data at the booking detail (segment & channel) level, we can gain good insights on the key contributors to RevPAR.

These five top performing markets in North America were able to increase their demand while also increasing ADR.  Each of these top five markets has their own unique problems to solve, but understanding where your business is coming from and via which channels and segments, can give you key pointers on where to focus and what actions to take.

In summary:

·         Understand and act at the segment and channel level

·         Leverage historical and future demand data to understand and improve business mix to enhance RevPAR performance

·         Understand what your competition is doing at the segment and channel level, to remain one step ahead

Performance Summary

The chart below shows the year-over-year position by market of committed occupancy, reserved occupancy, ADR and 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 performance better than the market average. Shades of orange/red indicate performance worse than the market average.

About TravelClick

TravelClick (www.TravelClick.com) is a leading provider of profitable revenue generating solutions for hoteliers worldwide. TravelClick offers hotels world-class reservation solutions, business intelligence products and comprehensive media and marketing solutions to help hotels grow their business. With local experts around the globe, we help more than 30,000 hotel clients in over 140 countries drive profitable room reservations through better revenue management decisions, proven reservation technology and innovative marketing. Since 1999, TravelClick has helped hotels leverage the web to effectively navigate the complex global distribution landscape. TravelClick has offices in Atlanta, Barcelona, Chicago, Dubai, Hong Kong, Houston, London, Melbourne, New York, Orlando, Shanghai, Singapore and Tokyo. Follow us on www.twitter.com/TravelClick and www.facebook.com/TravelClick