As Hawaii becomes the last state to remove masking mandates and pandemic restrictions fall like dominos worldwide, a resurgence in travel demand is poised to explode. STR recently reported that U.S. hotel performance increased from the previous week and showed significant improvement against 2019 comparables. CBRE’s Mid-Year Global Outlook forecasts a full return to 2019 levels in 2022, with an 11.2% increase in demand and just 1.2% supply growth. Kalibri Labs estimates occupancy and ADR recovery will be at 90% by the end of 2022.
While the outlook is cautiously optimistic, recovery remains fragile and spikes in coronavirus cases may continue to have a negative impact on these positive predictions. However, if we look at these statistics, it is clear we are heading into a time that will bring us back to previous levels of travel and, in turn, hotel occupancy. Even with the dynamic events currently happening in Europe, hoteliers and their staff will be challenged to keep up with the demand heading their way.
Business vs. leisure travel
Leisure travel was at the forefront of the 2021 recovery, and business travel was expected to rise to meet it as travel restrictions eased. However, recent world events and the prolonged spread of the virus continue to add risk to this recovery path, with flights, tourist attractions and events being canceled.
Even still, group business was seen to grow across all segments, with upper-tier hotels seeing a notable rise in the second half of 2021. Large groups and citywide conventions are not yet back, which has had a big impact on the overall picture for commercial business.
All that being said, now is the time for hoteliers to continue the path of reevaluating their technology stacks with an eye to automation in order to enable growth as inflation, labor shortages and rising wages affect profitability.
Automation unlocks opportunities
If your hotel hasn’t taken the steps to update, integrate and implement the right technology during the recent downturn, the time to do so may be passing you by. Savvy hospitality leaders have taken the time to reevaluate their technology integrations and have pivoted toward greater automated efficiencies and data-driven, profit-enhancing strategies. By forging collaborative partnerships with innovative technologists, many are solving their unique revenue management challenges.
Regardless of your place in the recovery, automation is no longer a nice-to-have—it’s a must-have necessity. Many leading hotel groups see an advanced revenue management system (RMS) as a competitive differentiator and a critical tool in their commercial growth strategy. They have discovered that the RMS is key to helping commercial teams generate the right data insights to adapt quicker to competitive intelligence, manage available inventory and support central revenue management operations from clusters to entire estates.
As hospitality organizations restructure around forward-looking commercial strategies, those who know their way around an RMS will hold the power that comes with sharing accurate intelligence and making confident decisions. And a sophisticated RMS isn’t just for enterprise chains but rather hospitality businesses of all types and sizes, from boutiques to all-inclusives and casinos to campgrounds.
Powerful and proactive analytics provide the compass needed to navigate market changes and demand shifts. The predictive analytics of a leading RMS factor in many data sources, including historical data which acts as a small piece of the optimization cycle but is still relevant for understanding pricing patterns, demand patterns, length of stay and booking behavior.
More importantly, advanced analytics evaluate future on-the-books and pace, price sensitivity, market data, unconstrained demand and even prices by room type and/or market segment, ensuring you drive the most profitable business to your property to help you recover faster.
Demand changes & market challenges
Demand has changed forever. Even as occupancy rebounds, the mix of your business will be different moving forward. And not just demand has changed—there are significant shifts in supply in many markets.
The purpose of technology is to create less work for operators, not more, particularly during difficult or limiting environments such as those we face today. This is necessary for achieving new heights of profitability in the future. While an automated system is able to update itself based on new information, a limited pricing tool can force a hotel’s revenue management team to spend precious time adjusting the system to succeed.
As the deluge of information revenue managers are forced to wade through continues to reach a new high-water mark each month, and finding workers to staff hotels remains a challenge, hoteliers will have to adapt. If revenue managers spend all their time looking at data points and adjusting their tools to react to minor changes in market conditions, they will not have the bandwidth to come to meaningful conclusions about the nature of this data. Sophisticated automation overcomes these restrictions.
Despite the challenges of shifting market conditions, hospitality has entered a new era of adaptability thanks to innovative technology. Revenue management has far outgrown the early epoch of “yield management,” allowing true revenue leaders and commercial strategists to tap into the full potential of each booking, across multiple properties, markets and segments. The secret lies in automated decisions hoteliers can trust.
So, are you and your staff ready for the onslaught of demand? Those who have taken the time to improve their technology stack will reap the benefits. Those who have not will likely be struggling to keep up.
Klaus Kohlmayr is chief evangelist/development officer, IDeaS, and a member of the Hotel Business advisory board.
Let us know what you think… To comment on this opinion piece, or to voice your own opinion about pertinent industry topics, please email Christina Trauthwein at [email protected]. We’d love to hear from you and share your point of view.
