Three Game-Changing Hospitality Trends for 2017
And What to Do About Them
By Tammy Farley Co-Founder & President, The Rainmaker Group | December 18, 2016
There is an old adage that says, "The only constant is change." Although attributed to Heraclitus, a Greek philosopher who lived around 500 B.C., apparently that statement is as true now as it has ever been – perhaps even more so. 2016 has proven to be a year of tumultuous change in the hospitality industry, from the dizzying pace of technological advancements and fluctuating global economies to the introduction and adoption of entire new segments of the business. With rapidly advancing technologies in just about every sector of the industry, hospitality has experienced an exponential transformation over the past several years, dramatically changing the face of one of the world's oldest occupations.
As another year draws to a close, savvy hoteliers are beginning to reflect on all that has transpired in 2016, in order to effectively plan and implement strategies that will optimize revenues in the coming year. In 2017, hoteliers and revenue managers will need to quickly grasp these significant market changes and understand, on a deeper level, the effect those changes and resulting trends will have on the industry. They will also need to analyze how each hotel sector and each individual market and property should approach doing business under these new realities, in order to maximize their market share.
Understanding what has happened, however is only a piece of the puzzle. Even more important is knowing how to leverage these changes -- or combat them. Current industry trends such as the escalating push for direct bookings, the return of group business, and the continued growth of the "sharing economy" are three key topics that will likely shape the hospitality landscape over the course of 2017. Following are some effective ways that hoteliers and revenue managers can take action as we head into a new year, in order to make these trends work for them and ensure success:
1. Competitive Insight Delivers Direct Bookings
While hotels benefit from the exposure and reach the OTAs can provide, it's no secret that they would prefer to avoid the resulting 20-30% commissions by channeling potential guests to their own direct booking engines on their proprietary websites. With gated loyalty rates continuing to gain in popularity among hotel brands as a way to circumvent rate parity agreements, it's important to note that it's only a matter of time before the OTAs implement a counter attack to keep their competitive edge. Large OTAs have already made claims that they will follow suit with their own loyalty programs and discounted rates, creating the potential for a price war that will drive rates and revenue down for everyone.
It's essential for revenue managers to have access to the omni-vision, so to speak, that competitive pricing information provides. This intel is a crucial aspect for revenue managers in developing pricing strategies that keep them ahead of the game. Particularly for independent and boutique hotels which have traditionally been unable to go toe-to-toe with OTAs in attracting direct bookings, the ability to quickly and affordably gain insight into pricing data across all channel types is highly beneficial. Using this competitive intelligence, hotel properties can effortlessly monitor both OTA and brand.com rates in order to implement meaningful revenue strategies. Without overstretching resources, these hoteliers can overcome once-limited opportunities to directly market to guests without the need for loyalty programs, in order to funnel traffic directly to their own websites. With the ability to automatically obtain rate information from the same OTAs and brand.com websites that travelers themselves visit, revenue managers can quickly gauge where their property stands in local markets, and adjust prices accordingly.