Analysis Shows Hotels Are Not Losing Share to AirBNB

AirBNB has been regarded as the great disrupter in the hospitality sector, but a new study shows that – for all the hype – AirBNB is not taking marketshare away from hotels.

The study, compiled by Smith Travel Research using AirBNB source data, offers critical insights into the true market penetration for the room-sharing service.

Among the key findings:

  • AirBNB has 2.3 million listings, far more than the world's largest hotel company, Marriott (1.1 million). However, much of AirBNB's inventory is available only in peak-season, not year-round.

 

  • Airbnb has higher peak-season occupancy because its users skew more heavily to leisure. Hotels have much higher year-round occupancy due to the diverse nature of their business (leisure, business, and group).

 

  • The markets with the highest hotel occupancy also have AirBNB's top occupancies. A deeper analysis shows that AirBNB is capturing excess demand, not shifting share.

 

  • Even on highest compression nights (hotel occupancy >95%) hotels are growing compression ADR faster than ever – at 35% in 2015 – with ADRs far exceeding those of AirBNB.

 

Jan Freitag, senior VP of lodging insights for STR, said that hoteliers are not at significant risk to lose share to AirBNB.

“I think the overall message is that the U.S. hotels industry continues to break demand records,” said Freitag. “We are selling more rooms than ever before on an annualized basis. In 2014, we had a demand record. We had another demand record in 2015. We expect in 2016 we will also top the number of rooms sold. Room demand has been higher than it has ever been.”

Top Travel Trends for 2016

This week, TripAdvisor released their annual list of top travel trends for 2016 (PDF). Hidden in the results are a few very interesting details that not only apply to 2016, but hint at travel trends that may have a longer tail for both hotels, airlines, and OTAs.
2016 Travel Trends

Top Travel Trends for 2016

Trend #1 – Seeking new experiences

Globally, 69% of travelers plan to try something new in 2016, including cruises (20%) and adventure travel (15%). A key travel trend in the data is that 17% will try solo travel for the first time in 2016. It will be key for hoteliers to anticipate the unique needs of solo travelers and catering to this emerging trend.

Trend #2 – Spending more because it’s “worth it”

One in three travelers plan to spend more in 2016 than they did in 2015, with nearly half (49%) of respondents doing so “because I or my family deserve it.” To capture these increased revenues, hotels must differentiate themselves with travel packages that focus on unique experiences, such as the "romantic kidnapping" and picnic at Namale Resort.

Trend #3 – Choosing destinations based on culture, special offers

Travel trends continue to point to the importance of targeted online marketing to focus buyers on your destination, with 21% choosing a destination because a hotel had a special offer or package. One in five global travelers have picked a destination because they saw it featured on television. In 2016, turn your marketing and social media team loose to create visibility for those key items that make your market a "must see."

Trend #4 – Staying cool and connected

While free wi-fi continues to be a critical buy factor for most travelers (46%), many travelers relate that they require "super-fast" wireless internet access (26%); 11% are willing to pay a premium to get the speed they need to stream movies and connect in high-definition.

Trend #5 – Rising room rates (and optimism)

Industry analysts and hoteliers are confident that 2016 will bring higher rates, with 47% of global hoteliers initiating rate increases. This travel trend should lead to capital improvements and enhancements for many in the industry. Despite these reinvestments, 65% of hoteliers expect profits to increase next year, as 2016 should give the industry a new baseline for both ADR and profitability.

Trend #6 – Managing reputations online

Given that TripAdvisor initiated the survey, it's not surprising to see reviews carrying a focus in 2016. I was surprised, however, to see only 59% of hoteliers planning to invest more in online reputation management in 2016. I anticipated this number to be much higher and see this as a travel trend that will go higher in future years. There is simply too much at stake for service providers to not actively manage these channels.

Hospitality Hot Reads: iPhone 6, Net RevPAR and ProPAR

Here's what I'm reading this week to stay aware of emerging trends and opportunities:

Travel Weekly Consumer Trends 2014: Explosion in Mobile Bookings
With the launch of the new iPhone 6 by Apple this week, larger phones and "phablets" will continue to gain mobile share. The larger interface is a great canvas for hospitality sites and apps, which rely on rich media and large photos. Phablets have just 6% of the market share but 11% of the app usage, meaning owners of these devices are heavily device dependent and actively engaged.

Measuring Acquisition Cost alongside RevPAR
As focus shifts from gross revenue to net profit, acquisition cost per room night has come under more scrutiny. Is it acceptable to measure total RevPAR, or should hoteliers focus more closely on net RevPAR and ProPAR (Profit per available room)? This is a very intriguing topic and one conversation that most revenue managers are not fully prepared to have with their ownership.

Sea Change
A detailed discussion of new benchmarks for hoteliers, including ProPAR, ProPOR (profit per occupied room), Net RevPAR, Net RevPOR, and COA (cost of acquisition). This article, along with the previous piece, represent a strategic shift in revenue management. Great read.

TripAdvisor insights on Hotel Guest Engagement

TripAdvisor has compiled a study of guest engagement and found several key factors that drive hotel guest engagement on the review site.

Among the key findings, management responses to TripAdvisor reviews can drive bookings on the site by more than 20% Click to Tweet. Specifically, hotels that responded to guest reviews were 21% more likely to receive a booking via TripAdvisor than hotels that did not respond to reviews. And properties that respond to over 50 percent of their reviews further increase their likelihood of receiving a booking inquiry by 24 percent over those that did not respond.

In addition to creating guest engagement, management responses to reviews seems to have a "halo" effect of higher review ratings. Hotels that regularly responded to reviews from guests have consistently higher reviews as well. From the study:

0% response rate = 3.81 average review rating
5%-40% response rate = 4.04 average review rating
40% – 65% = 4.05 average review rating
65%+ response rate = 4.15 average review rating.

Additionally, hotels with photo displayed on the TripAdvisor site saw a 138 percent increase in guest engagement vs. properties without photos. And for those hotels with more than 1000 photos, the guest engagement factor is a 203 percent increase over those with no photos.

As past studies have shown, the impact of guest reviews on both hotel ADR and RevPAR are significant, so any increase in reviews represents a very meaningful impact for hoteliers and management companies.

In a release, TripAdvisor for Business President Marc Charron tied guest engagement directly to management/owner engagement on the website. "Looking at the results of this study, a clear theme emerges: the more engaged the business owner, the more interested the traveler," said Marc Charron, President, TripAdvisor for Business. "It’s no secret that traveler want to see pictures and read reviews of a property before making their booking decision. What’s really key is the upward trend in average review ratings, traveler engagement levels and booking inquiries on the site, the more frequently a hotel owner responds to reviews. Taking part in the conversation and demonstrating that the owner cares about feedback has a very real and measurable effect on converting a traveler from a casual browser into a potential guest."

The Answer: How TripAdvisor Rankings Are Calculated

Given the popularity of TripAdvisor and the impact of hotel reviews on ADR and RevPar, hoteliers and guests want to know the answer to one pressing question: How are TripAdvisor Rankings calculated?

TripAdvisor RankingsTake New York City, for example. A recent ranking of hotels by TripAdvisor found the Best Western Herald Square to be among the top hotels in Manhattan.

No disrespect to the Best Western, but many travelers may be asking just how this limited service property is ranked higher in New York City than the Trump International, Four Seasons New York, and – of course – The Ritz-Carlton, New York Central Park. (There's also a pretty good chance that hotel owners and managers are asking the same thing!)

The answer, according to TripAdvisor, is that hotel rankings are determined by the following:

TripAdvisory Hotel Ranking Criteria

  • Number of Reviews per Hotel
  • Recency of TripAdvisor Reviews
  • Rating given to Hotel by Reviewers

TripAdvisor takes these three core elements – quantity, quality, and recency – and runs them through their proprietary algorithm to determine the rankings for hotels in each city.

The more highly rated reviews a hotel receives in a short-period, the higher their ranking will be on TripAdvisor.

It's worth noting that TripAdvisor rankings are updated for each city are updated approximately once per week, to incorporate new reviews and ratings.

So, there you have it… the "secret" to how TripAdvisor calculates rankings for every city.

Source: TripAdvsor Help Center

The One Problem that Costs Hotels the Most Customers

If you consider the number of problems that can befall hotel customers during a stay, it can be a bit overwhelming.

Angry Hotel CustomersBroken remote controls. Plumbing problems. Noise from adjoining guestrooms. Incorrect orders from room service. Room key issues. HVAC issues. Kids running in the halls. Not enough chairs at the pool. Slow service in restaurants. Incorrect room type at check-in.

And the list goes on and on.

Studies show that product problems account for nearly sixty percent of all guest complaints.

But there is one problem – over and above all others – that causes not only dissatisfaction, but a complete break in a hotel customer's trust.

What could negatively impact hotel customer loyalty so greatly? According to data-analysis firm Market Metrix, staff-related problems in hotels can lead to a whopping 26.2% drop in guest loyalty Click to Tweet.

Service problems, on the other hand, make up a much smaller portion of reported problems, but have a much more dramatic impact on guest loyalty. Just look at staff-related problems in the table below. They are only 4.7% of reported problems. But staff problems punch way above their weight causing loyalty to plummet by over 26 points when they do occur.

On the other hand, the nearly 60% of hotel customer complaints COMBINED only account for a 12% drop in hotel customer loyalty.

This study begs the question: With such a large number of guest product complaints, how much time is your hotel spending to fix staff problems?

Television remotes can be replaced, but a disengaged hotel customer may be lost forever.

 

New Study Shows Hotel Reviews Drive Rate & RevPar

A new study from the Cornell School of Hotel Administration details that hotel reviews posted on social travel websites, such as TripAdvisor and Travelocity, positively impact a guest's willingness to book reservations at a premium rate for a reviewed hotel.

"The Impact of Social Media on Lodging Performance," by Chris K. Anderson found that the number of reviews as well as the willingness of consumers to assign credibility to hotel reviews has increased over time. Anderson also found that a 1-point increase on Travelocity's review scale – such as increasing a hotel's review from 3.3 stars to 4.3 stars – drives an 11.2 percent premium in a hotel's rate, while still maintaining occupancy and market share.

Given these results, it's increasingly clear that hoteliers must dedicate resources to monitoring their social reputation, actively review online hotel reviews and invest further in guest experiences on-property to create engaged guests. (Read more on who writes hotel reviews)

Beyond Travelocity, Anderson determined through regression analysis that a 1-percent gain in a hotel's social media reputation is worth 0.89% in average rate lift and a 1.42 percent increase in RevPar. Click to Tweet

The full social media impact study is available online from the Cornell School of Hotel Administration.

Insights: Why Multigenerational Travel is THE Emerging Trend

A recent presentation by Peter Yesawich, vice chairman of MMGY Global, highlighted a number of trends and insights for the hospitality market in the near term. While there was definitely a lot of beneficial information presented, one key insight may emerge as the number on trend in hospitality: multigenerational travel.

"Multigenerational travel" or "mutligen travel" most commonly refers to grandparents traveling with grandchildren, but can reflect any number of generations traveling together.

According to MMGY Global, more than 20% of travelers are grandparents. Of those, 40% have taken a trip with a grandchild during the past year. And eight out of 10 times that a grandchild comes along, so does a parent.

As you can see, the market is already well developed. As more affluent baby-boomers retire and begin traveling alongside children and grandchildren, this market will will just continue to mature (pardon the pun!)

Several elements are key to capturing this target market, but most important among them is a well-developed recreation program that meets the needs of these guests collectively. Broadly inclusive cooking classes, walking tours, and lower-impact activities that can be enjoyed by all age groups are key.

For the hospitality market, multigenerational travel represents one of the few demographics that shows extensive growth potential domestically. Beyond just welcoming family guests, multigen represents a new gateway for luxury hoteliers. Traveling alongside affluent parents and grandparents, economically stretched GenX and GenY consumers are discovering brands that can serve them for decades to come as their affluence grows, making this a significant play for the luxury market.

Who writes hotel reviews?

Travelers today are innundated with resources to assist in planning trips. Among the tools are first-hand "unbiased" published on the major booking sites, including TripAdvisor, Booking.com, Expedia and others. 

But, have you ever wondered, "Who writes these reviews, anyway?"

Olery, a reputation management company, has taken a stab at answering that question and the answers are pretty interesting. 

Generally speaking, Olery found that hotels receive about 300+ reviews per year on average and that 46% of travelers post hotel reviews. Reviewer demographics skew slightly towards female guests, with a plurality of reviews being written by 35-49 year-old guests.

Interestingly, guests on vacation and leisure travel – those who are spending their own money – write the majority of hotel reviews. 

 

Study: 61% of smartphone users would book travel on mobile devices

A new Mojiva study being reported by EyeforTravel reveals that 61% of smartphone users would be comforable booking travel on their iPhone or Android.

 

Purchasing_travel_on_mobile

The study, which was based on responses from almost 200 mobile users on the Mojiva network, shows that while 64% of users would be comfortable spending up to $500 dollars via their phones for travel, nearly forty percent of smartphone users would be comfortable booking travel in excess of $500. 

 

Source: Eyefortravel