BALTIMORE—For all their intelligence and savvy, when revenue managers discuss key strategies and data to various stakeholders within a hotel, those items often get lost in translation.

It’s not enough to crunch the numbers; the best revenue managers also to be able to communicate them, according to experts during the “Translate Math to English” panel at HSMAI’s Revenue Optimization Conference.

Failure to do so will not only result in less-than-informed decision-making, but also it puts the position of revenue management in the back seat, said Heather Scharmer, manager of revenue management education for Four Seasons Hotels and Resorts. If stakeholders can’t understand revenue managers, then revenue managers effectively lose their voice.

The challenge, added Kurien Jacob, senior VP of revenue and distribution for Highgate Hotels, is tailoring the message for different audiences.

“We need to translate data into different languages that different people understand,” he said. “One size doesn’t fit all.”

Some people like charts, while others like tables. Some might be focused on the bottom line, while others might be focused on operational strategies.

“How many have you come into work (in the) morning and you get asked, ‘How’d we do last night?’” Scharmer asked. “We have to think about what it is the person who’s asking the question is looking for.”

The panelists outlined areas of focus when addressing the following key stakeholders:

Owners
“What do owners look for?” Jacob asked. “Profit, (return on investment) are key elements.”

They also focus on their hotels’ performance versus that of the market. “How are you doing?” Jacob asked. To answer this question, benchmarking data from the likes of STR, parent company of HotelNewsNow.com, is critical, he said.

Owners also want to know strategies to better position their property in the marketplace. Revenue managers should expect to answer questions such as:

• What does the future look like?
• How do you get there with a plan?
• How are our revenue strategies helping to preserve asset value?

“The numbers can be interpreted in various different ways. It’s key to figure out what is critical in driving those numbers and translating that,” Jacob said.

For example, if total rooms sold at a given property are down 2,000 for the month, an owner might interpret that as a very bad thing. However, if the property is losing those roomnights as part of an effective strategy to drive higher-rated business and thus more revenue at the bottom line, then the loss is actually a very good thing.

The numbers must be presented in a way that presents the overall picture as opposed to a single strong or weak data point, Jacob said.

On-property management
GMs and other on-property managers typically look for information that impacts or drives operational strategy, Scharmer said.

GMs, for example, should be aware of initiatives such as pricing strategies that aim to push higher occupancies.

While performance metrics are certainly important, information concerning earnings before interest, taxes, depreciation and amortization and other financial numbers might cloud the picture. The goal is to keep the message clear and on point, Scharmer said.

Sales
While revenue managers must communicate effectively with all stakeholders, the need to work closely and effectively with sales is absolutely critical, the panelists said. As such, data should be streamlined to focus on key pricing decisions, target customer segments and any other information that could enhance sales efforts.

But it’s not enough to simply share the data with the sales team. Revenue managers must initially work to get buy-in by highlighting the “why” behind certain strategies. A revenue manager might be hard-pressed to tell a salesperson to not book a ready and available piece of business. But if that same revenue manager can show that a high-priced piece of business is available and waiting in the ranks, then the directive should prove much easier to swallow.

Executives
For revenue managers fortunate enough to get ear time with a high-ranking company executive, the key is to keep the message short and on point, panelists said.

Think of the presentation as a list of very high-level bullet points. Some areas to consider:

• What does overall performance look like at present?
• Where do opportunities exist to drive revenue, and what strategies are being employed to get there?
• What weaknesses exist, and what strategies are being employed to improve upon them?
• Where is performance headed, and what strategies are being employed to improve upon or achieve that outlook?
  

BALTIMORE, Maryland—Pricing strategies were the common thread throughout the day-long Revenue Optimization Conference Monday, but it was a panel that specifically addressed the topic for more than an hour that revealed those strategies are no different than taking care of a car.

At least that’s what Ryan Andersen, director of revenue optimization for the Carlson Rezidor Hotel Group, indicated during the “Getting the price right from philosophy to tactics” panel.

“We tell hotels to look at the weights and offsets like an oil change and do it every three months,” Andersen said, when speaking of pricing optimization. “Your strategy may have changed (during that time) and your system no longer is optimizing your rate. There’s still a human element to it.”

The debate over the human element revealed even that aspect only goes so far in the implementation of pricing strategies. Andersen said that while hotel operators get to choose how to weight the variables involved in setting pricing strategies, Carlson’s system automatically shoots competitive sets and can “tell you where your price is.”

“Ultimately, when the right data is available, those weightings can be automated so there is no human element of weighting it,” said Rao Avasarala, VP of business intelligence for TravelClick.

Tammy Farley, principal of The Rainmaker Group, said companies using automated revenue-management techniques can focus on other things because pricing is optimized by pre-set conditions.

Striking the right formula
Kimberly Furlong, VP of revenue management for TPG Hospitality, said strike-through pricing—the practice of crossing out a higher price and publishing a second lower price—has its place in the hotel industry.

“There’s a time and place for strike-through pricing,” she said. “I use it more for independent hotels that can be a little more creative. If it ends up being your primary pricing strategy, then you probably overused it.”

It can be a particular problem because so many other channels float off the best-available rate, and if that rate is created by a strike-through philosophy, it puts undue pressure on the rate structure, Furlong said.

Price parity and flash sales
No conversation about hotel-rate pricing is complete without addressing price parity (having the same best-available rate on all reservations outlets), and the panelists obliged.

Andersen said “from a brand perspective, we will always push price parity” and stressed the most important thing for hoteliers is to stay off extranet outlets—those vehicles that permit controlled access from the outside.

“It’s only going to take a few big hotel companies writing new parity pricing (to force change),” he said. “With the transparency of rates and the transparency of guests who aren’t loyal, is it our best interest to offer different price points in the channels because guests are more savvy?”

Furlong said the concept of price parity is over inflated.

“The biggest risk in breaking parity is losing an important partner that you might need down the road,” she said. “I don’t think parity is as important as we’re making it now.”

It’s sometimes important for guests to see themselves as “getting a win” by securing a reduced rate, but pricing parity prohibits that, according to Furlong.

“I want the option to provide the discount or value-add,” she said. “I would do it across all channels with all my partners. I want to be able to do it to all customers, but the brands have us hand tied a little bit (through price parity).”

The panelists in general gave a thumbs-down to flash sales.

“It’s about knowing the math behind it—did it really make you any more money,” Andersen said. “I’m not a huge fan of flash sales.”

Farley said the danger of flash sales is attracting guests who don’t necessarily fit a hotel’s ideal demographics.

“Does it in any way compromise the integrity of the brand?” she said. “Are the customers the ones you want on property?”

Andersen then summed up the feeling of the panel: “Value perceived is value achieved,” he said.

Facing a big obstacle
One of the biggest obstacles for effective pricing is knowing the rooms available in your competitive set.

“The price you want to put in place has to factor in the supply in the market,” Avasarala said.

“That’s the Holy Grail,” Furlong added. “They have a rate, but you don’t know how many rooms they have at that rate.”

Furlong said pricing specialty rooms is where its gets difficult when a revenue manager doesn’t know how to anticipate a competitive set’s future occupancy.

“We have more difficulty in the industry of pricing a suite or concierge,” she said. “The way we price those right now is so antiquated compared to the progress we’ve made for standard rooms.”

Andersen said the one thing revenue managers must know is the hotel’s customer mix.

“I am really big on (market) segmentation and knowing the price points of segmentation,” he said. “It’s an overall picture, not just the one price point having proper analysis.”

To wrap thing ups, Furlong said knowing the full picture of pricing means knowing how to analyze available data.

“Test and measure,” she said. “I hear a lot of revenue managers say they are testing a price but don’t understand scientifically what it means.”

BALTIMORE—As the distribution landscape continues to fragment, revenue managers are being tasked with keeping tabs on the latest and greatest new platforms.

But are all channels created equal? Attendees during a workshop at HSMAI’s Revenue Optimization Conference had mixed reviews as they discussed the following five discount models.

1. Backbid
As HotelNewsNow.com has written in the past, BackBid is a hotel booking site where travelers post their existing hotel reservations and accept bids from alternative properties to find the best value for their upcoming hotel stay.

The channel empowers consumers to find the best room for the best price, knowing all the details about a given property before accepting a new bid. There’s no risk involved, as they can deny any bid and keep their existing reservation.

While the site touts its focus on confirmed travelers and ability to sell distressed inventory as a plus for hoteliers, attendees of the HSMAI workshop were not as impressed. At its best, they said Backbid allows them to possibly unload inventory at a low yield. At its worst, they said the channel encourages a downward spiral, with competitors outbidding each other with lower and lower rates.

2. Guestmob
The semi-opaque Guestmob allows guests to choose from a collection of hotels in select cities.

Here’s how it works: A guest registers on the free site and then searches within one of 20 select U.S. cities by date. Guestmob produces a list of “collections” that typically include from four to eight similarly rated and located hotels, which guests can view by name.

A recent search for hotel rooms in Chicago, for example, yielded, among others, a collection for “The Loop-Downtown,” which offered a room rate of $157 for eitherThe Wit, Swissotel, Hyatt Regency, Fairmont Millennium Park, Hotel Allegro and Palmer House Hilton.

Only after guests confirm the booking do they see at which hotel they’ve actually made the reservation.

The channel streamlines the booking process for guests, arranging hotels in like-minded, curated clusters as opposed to a list hundreds of properties long on most hotel booking engines. It also allows travelers to peak past the curtain of traditional opaque channels and see at which properties they might be booking. Bookings made on Guestmob are also refundable.

Guestmob streamlines the distribution process for hoteliers, who only have to release inventory the Thursday before check-in when it’s clear the room is not being sold on other online travel agencies. Guestmob allows hoteliers to maintain rate parity with other channels and still capture full-price bookings on brand.com.

Of all the emerging channels discussed, Guestmob got the highest marks from workshop attendees, who viewed it as a potentially viable semi-opaque platform.

3. Hall St.
European channel Hall St. is where hotel distribution collides with swap meets. Guests register on the platform, negotiate rates with hotels, and then can either enjoy the pre-paid reservation themselves or sell it to other users.

The platform acknowledges that “last-minute changes are part and parcel of modern-day lift” and gives guests the freedom to change the name on their reservations or sell them to other users.

But hoteliers participating in the HSMAI workshop said Hall St. was a dead end, claiming it was too convoluted to gain a following and too labor-intensive and complex for them to devote already-strapped resources. As one attendee said, “I’d prefer to take a detour.”

4. Tingo
Another familiar distribution channel to readers of HotelNewsNow.com, Tingo monitors any changes in hotel rates travelers have booked and then rebooks them at the lower rate at no cost to the client should the rate drop (provided there are no cancellation charges).

The value to consumers is obvious: Travelers book the exact room they want and sit back and watch as the rate falls closer to the booking date.

Tingo also claims a number of benefits to hoteliers, including longer booking windows (an average of 45 days), longer length of stay, higher average daily rate and bookings made on more expensive, flexible rates.

But workshop attendees were not so sure. They feared the platform would expose weaknesses in existing discounting practices and thus erode rate. While they agreed Tingo was perhaps the most user-friendly of all the channels discussed, they also predicted hoteliers might respond by instituting more aggressive cancellation penalties to prevent rebookings.

5. Traveltipping
Traveltipping tips the booking process in favor of guests—or so the site claims—by creating unique travel packages to destinations throughout the world at a fraction of the cost. Guests start their search by selecting one of six world regions: North America & Caribbean, Latin America, Europe, Africa & Arabia, Asia and Oceania. Each region generates a handful of travel deals, such as four-night stay for two at an “eco adventure lodge” in the Dominican Republic.

Deals are quantity limited, allowing suppliers to sell what they want, when they want. They’re also marketed as packages to help drive value and increase ancillary spend. The aforementioned deal in the Dominican Republic, for example, included a kayak excursion, mountain bike ride, daily breakfast and additional taxes in addition to the hotel stay.

The goal is to help suppliers sell distressed inventory and increase seasonal revenue during shoulder periods, according to the site.

Hoteliers were nonplussed, however. Those sharing their thoughts during the workshop said there was not much about Traveltipping that stood out from either a consumer or hotelier perspective. It was yet another in a litany of similar packaged-deal sites, they said.

BALTIMORE—As the hotel distribution landscape continues to evolve, search engines appear to have little to worry about. The online-travel agencies, on the other hand, might need to batten down the hatches.

New innovations in social and mobile could begin stealing share from the likes of Expedia, Travelocity and Priceline. And then there’s the 800-pound gorilla, Google, which is making more aggressive strides into the hotel space.

“Search will continue to be important. The guys that are probably at the greatest risk in the social and mobile space are OTAs,” said Scot Hornick, partner at management consulting firm Oliver Wyman.

Hornick was one of three panelists addressing the roles of search, social and mobile in hotel distribution during the opening session of HSMAI’s Revenue Optimization Conference.

“Nobody has really come up with anything that’s going to take away search,” said Gareth Gaston, senior VP of global ecommerce at Wyndham Hotel Group.

If search didn’t have a role, Gaston asked, then why would OTAs spend hundreds of millions of dollars on search to drive bookings?

Perhaps a better question: How much will search evolve to address the hotel space specifically?

Gaston offered Google’s Hotel Finder as one particularly apt service that shows hints of what’s to come.

But it’s not just search that is evolving, Hornick said. The entire distribution space has changed with the proliferation of countless new channels and applications, each claiming to offer consumers the best way to shop and book hotel rooms.

None has perfected the task, however. “Search doesn’t answer the question very well these days,” Gaston said.

Yes, search can point consumers in the right direction, but that direction often is fraught with hundreds of forks in the road, the panelists said.

“Nobody wants 400 hotels as the answer,” Gaston said. “You want one. Nobody provides that today.”

The analysis paralysis isn’t just limited to search results, however. Seeking out the right search tool can be just as complicated, panelists agreed.

The market is more fragmented than ever before, Hornick said. That means each channel will have a harder time building scale. And more importantly for hoteliers, distribution is more complicated than ever before.

Hoteliers in need of help
Faced with an increasingly fragmented, shifting and complex distribution space, hoteliers must buckle down and address the problem head on, the panelists agreed.

Focusing on reservations across a variety of channels is just as important as focusing on lobby renovations and breakfast offerings, they said.

“You can’t throw your arms up and say, ‘This can’t be done,’” Gaston said. “It has to be done.”

To begin doing this, the panelists advised attendees to start by looking at costs.

The first cost is quite simply the cost of booking, whether that be commission, share of revenue or referral fee.

The second is the full cost of booking. An OTA that charges a commission of 25%, for example, does not just provide reservations, said David Levine, director of business performance at Travelocity. It also provides marketing, international reach, fraud risks and so on.

Likewise, a booking made on brand.com is not free, the panelists said. Franchisors pay fees for the service.

“You’re going to pay whether you’re part of a brand, hire a consultant or do it yourself,” said Cindy Estis Green of Kalibri Labs, who along with Lalia Rach of the NYU Preston Robert Tisch Center for Hospitality, Tourism and Sports Management, co-moderated the session.

The third and final cost is the opportunity cost—or the lost revenue of distributing inventory on one channel versus another. Perhaps, for example, a guest would have paid more on one channel versus another. Perhaps he or she could have been upsold. Perhaps there were packages the guest could have booked or maybe there was a way to extend length of stay.

When added together, those individual costs will provide revenue managers with a better sense of the return on investment for each channel, Estis Green said. Only then will they be able to discern the best possible channel mix for individual properties.

“I suggest that revenue managers really need to evolve and become profit contribution managers,” Estis Green said. “It’s not the revenue that matters as much as it is the profits.”

Are those costs and profits easy to identify? Certainly not, Estis Green said. But even rough estimates are better than no data at all.

“It’s difficult to assess,” Gaston said. “The costs are all over the (profit-and-loss statement).”

Rate parity
If only to complicate matters further, the panelists foretold of the inevitable demise of rate parity.

“It already is a thing of the past in some markets (such as Europe),” Hornick said.

Revenue managers should be able to strategically set different types of rates on different channels, Gaston said.

Ultimately, it depends on the economy, Hornick said. “If demand is soft, then rate parity will survive another round of contracting,” he said. If, however, the economy turns around, hoteliers might end the practice.

Many of Hornick’s clients are prepared to do so, he said. Almost all of them have a plan in place if the opportunity presented itself.

The onus to do so is on the major chains, the panelists agreed.

“The brands have really put a lot of marketing efforts behind parity and best rate guarantees in the (United States),” Travelocity’s Levine said.

“The argument has been more a question of whether we continue to give the OTAs the opportunity to achieve rate parity with brand.com,” Hornick said.

The hotel industry wrapped up spring on a solid note and, based on forward-looking data from Pegasus Solutions in advance of this week’s release of The Pegasus View, travel demand is going to remain healthy for the rest of 2012.

Bookings are expected to remain steady month over month with potential upticks in August and September. Rate growth also is expected to continue steadily.

“Rate strategy and channel strategy are going to be key for the summer,” said Julie Parodi, senior director of strategic planning and analysis for Pegasus and editor of The Pegasus View. “Because rates are truly driving growth, hoteliers should review and revisit their pricing strategies—how they’re pricing across their channels and allocating inventory.”

Even though the leisure channels might begin driving more demand as summer travel heats up, hoteliers still need to be wise about keeping the cost of the various channels in mind, Parodi said.

“You don’t want to be giving all of your inventory to channels with high costs, and you want to be smart about using opaque for distressed inventory,” she said.

Based on electronic booking data from approximately 63,000 travel agencies, Pegasus categorizes third-party bookings as leisure travel and bookings from the Global Distribution System as business travel.

Business demand
Average daily rate is leading growth on the business side, with global transactions in May priced 3.9% higher than in May 2011. In North America alone, rates in May were up 7.6% over May 2011.

“Companies need to outperform their competitors and in-person interaction is helping them do that,” Parodi said. “There’s no better way to build relationships.”

She said the business traveler is being selective with his or her trips and exploring more closely the worth of every cost. They’re forced by their managers to justify how travel will further boost their sales and show how their trips contributed to the bottom line.

“We know they’ve been using length-of-stay to keep costs under control,” she said. “Now there is opportunity for different-sized companies to become involved and also different locations. It’s not as critical that their meetings and conventions are in city center. Hoteliers should make sure companies know they can host these meetings without busting budgets.”

Leisure demand
On the leisure side of the industry, global rates for the month of May were up 5.6%. In North America, rates were up 4.7% against prior year.

However, the absolute number of hotel bookings made through the channels Pegasus measured continues to fall short of 2011 numbers. On both the leisure side and business side—both globally and in North America—the number of bookings grows month over month but still fall significantly shorter than monthly bookings in 2011.

“Consumers still are devoted to taking vacations, but they’re trying to get the most for their money,” Parodi said. “Location, location, location is being trumped by value, value, value. Hotel strategy comes into play in terms of researching which markets are best to target and determining the appropriate timing for that marketing.”

Parodi said hoteliers should invest heavily in promoting their hotels in markets that drive the most demand but also look to see if there are surrounding markets that offer untapped opportunities.

ATLANTA, Georgia—Despite news that will likely influence the short-term economic performance of the U.S. economy, PKF Hospitality Research, LLC (PKF-HR) affirms its strong forecasts of RevPAR growth for the nation’s lodging industry. According to the recently released June 2012 edition of Hotel Horizons®, PKF-HR is projecting RevPAR for U.S. hotels will increase by 5.8 percent in 2012, and another 6.6 percent in 2013. These forecasts are identical to the RevPAR forecasts presented in the March 2012 edition of Hotel Horizons®.

“Given the headlines of late, I understand why our clients are concerned about the future health of the economy and the U.S. lodging industry. However, the fundamental questions should focus on how many of these headlines were a surprise,” said R. Mark Woodworth, president of PKF-HR. “Sluggish job growth and economic chaos in Europe have been in the news for a while, and despite these conditions, the performance of the U.S. lodging market during the first quarter of 2012 was just as strong as we had forecast. Therefore, we see no reason to change our opinion regarding the remainder of the year.” The 2012 annual RevPAR growth forecast of 5.8 percent is the result of a projected 1.6 percent increase in occupancy and a 4.1 percent gain in average daily rate (ADR).

Second Half Slowdown

PKF-HR is forecasting average quarterly RevPAR gains of 4.9 percent during the second half of 2012. This is less than the estimated 6.9 percent RevPAR growth enjoyed during the first six months of the year. “We are projecting a bit of a slowdown in performance during the second half of 2012. Some of the more critical uncertainties throttling demand growth will not be resolved until after the presidential election and decisions are made regarding tax legislation,” Woodworth noted.

One of many economic measures monitored by PKF-HR is The Conference Board’s Leading Economic Index® (LEI). “We believe there is a six to eight month lag between changes in the LEI and movements in lodging demand,” said John B. (Jack) Corgel Ph.D., the Robert C. Baker professor of real estate at the Cornell University School of Hotel Administration and senior advisor to PKF-HR. “The decline in the LEI observed during the last quarter of 2011 suggested a softening in the demand for hotel rooms during the third quarter of 2012. However, the LEI bounced back nicely during the first half of 2012, thus perpetuating our optimism for 2013. Recoveries from economic recessions are usually not even.”

Outer Year Optimism

“While our outlook for near-term horizon has not changed, we are now projecting more robust ADR growth in the outer years,” Woodworth noted. “From 2014 through 2016, we have increased our annual ADR growth rates by an average of 150 basis points. The solid growth in lodging demand exhibited in 2010 and 2011, combined with limited increases in hotel supply, will serve as the base for above long-run average occupancy levels from 2013 and beyond. Hotel managers should be able to leverage these market conditions and raise room rates.”

In 2012, 29 of the 50 Hotel Horizons® markets are expected to achieve occupancy levels above their long-run average. With demand growth forecast to continue to rise greater than supply in most cities over the next two years, 42 of the 50 markets are projected to exceed their long-run average occupancy levels by 2014.

With ADR driving revenue growth in the future, hotels have the opportunity to convert growth on the top-line revenue to strong gains on the bottom-line. Previous research conducted by PKF-HR has found that profit growth is greatest for hotels when revenue gains are driven by increases in ADR.

“For the most part, the cost containment practices implemented by operators in 2009 were maintained through 2011,” Woodworth stated. “The combination of efficient revenue growth and expense controls will result in attractive levels of hotel profit growth through 2016.” PKF-HR is projecting unit-level net operating income (NOI) growth to average 10 percent per year through 2016. This is superior to the long-run average NOI growth rate of 3.9 percent.

Mid-Price and Mid-Section

Luxury and upper-upscale properties achieved the greatest gains in RevPAR during the initial stages of the industry recovery; however, going forward, PKF-HR believes the greatest gains in annual performance will shift to the more moderate-priced segments. “Capacity restraints and high ADRs at upper-tier hotels will force travelers to seek accommodation in the lower-tier properties,” Woodworth said.
 
In addition to mid-priced properties, hotel markets in the mid-section of the nation are starting to participate in the recovery. “The cities of Nashville, Houston, New Orleans and Salt Lake City are forecast to experience the greatest gains in demand in 2012. The early stages of the U.S. lodging industry recovery favored the large gateway markets. The return of demand to cities in the nation’s midsection is a sign that the recovery is expanding beyond the Atlantic and Pacific coasts,” Woodworth noted.

With the summer travel season kicking off, an election year already well underway, fluctuating gas prices, financial and political drama in Europe and a tentative economic recovery trying to stand on solid footing, hospitality forecasters have plenty to keep track of right now. Sorting through myriad social, economic and political factors that influence the hotel industry can be a challenge, but it is worth noting the continuation of one ongoing trend in particular that has been evident throughout the first half of 2012: strong numbers from the transient travel sector. In fact, transient travel has been trending upward for years now.

One thing catching the industry’s attention is that the bump in transient travel holds true across the board; both leisure travel and business travel have contributed to the increase. The overall trend is an encouraging one for the industry, and the fact that the transient travel gains can be seen across multiple markets and multiple travel categories provides some additional reason for optimism that this momentum might be sustainable. Taking a closer look at how the recent transient travel numbers break down might provide some important insights about what this trend might mean for the industry in the months and years ahead.

According to STR, parent company of HotelNewsNow.com, transient demand increased 18.4% between 2006 and the first part of 2012. It is important to point out that group demand dropped by approximately 6.4% during this same time period, making the transient segment the primary driver of overall demand growth.

While group bookings have made a nice recovery during 2012, transient business continues to perform well. TravelClick reported in March that thetransient segment is showing a 3.7% occupancy increase and a 5.2% increase in average daily rate compared to 2011 numbers.

The lion’s share of transient growth following the 2008 recession was driven by increases in leisure travel, and leisure continues to be a strong driver. But transient business travel has done its share, as well. According to U.S. Travel Outlook, transient grew 6.7% in 2011 and is predicted to grow an additional 3.7% in 2012. The fact that leisure travel and business travel have both contributed to boosting the transient segment over the past few years is indicative of a trend that might have some staying power. The steady (and ongoing) increases in room demand and rates, and consequently revenue per available room, in the wake of the recession have been directly related to sustained growth in the transient segment.

What’s next?
The big question is what happens next? Where does transient travel go from here? Is the increase in transient travel just an optical illusion of sorts—a bigger piece of a smaller pie—or are these numbers indicative of what is really a more significant long-term trend? There are a couple of good reasons to suggest that this might be the latter. One of those revolves around who is doing the traveling. While we may be tempted to think that this trend might be the result of a more mobile and flexible generation of baby boomers getting to a point in their lives where they can do more traveling, growth in this sector actually defies any simplistic demographic profiling. Another interesting data point is where these transient travel gains have accrued. Conventional wisdom might dictate that the mid-level hotel market would see the biggest gains but that has not been the case. Luxury, select service and discount have all seen transient growth, with leisure travel increases spread evenly across all segments. None of this is definitive, but it does provide some evidence that we may be at the start of a broader and more sustainable economic recovery.

The next question is if this bump is sustainable, and these numbers are meaningful in the long term, what can the hotel industry learn from this information? There are certainly some short-term ways to nurture and leverage this trend, with increasingly sophisticated and strategic social-media campaigns being one of the best examples. With approximately 1/3 of all bookings originating online, the Internet provides a great platform to access this segment across multiple verticals by engaging in cross-promotional initiatives and coordinating with travel sites, travel channels and other transient travel-friendly venues.

Aside from the mechanics of transient-travel promotion, the more important takeaway from all of this might be that we simply need to recalibrate our expectations and discard outdated assumptions about where our business is coming from. It also is imperative to begin to appreciate and cater to the transient travel sector (especially the leisure component) more so than in the past. There might be a lesson there for what it will take for the industry to be strong in the future and to continue to diversify in a way that will enable us to not take quite as big of a hit when the next economic downturn arrives. The transient segment and domestic leisure travel together with inbound foreign travel (which we have barely begun to scratch the surface of) might be the kind of backstop we need to complement business travel and make for a more diverse, sustainable and successful future for the hotel industry.

First Hospitality Group, Inc. has been involved in the development, ownership and management of hotels since 1985. Currently, the First Hospitality Group, Inc. portfolio consists primarily of Hilton and Marriott affiliated assets. In addition, First Hospitality Group, Inc. has ownership interests and manages hotels affiliated with InterContinental, Hyatt and Carlson. For further information, visit www.fhginc.com or call Robert Habeeb at 847-299-9040.

The opinions expressed in this column do not necessarily reflect the opinions of HotelNewsNow.com or its parent company, Smith Travel Research and its affiliated companies. Columnists published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.