Lodging companies around the world are investing more into business intelligence and performance improvement solutions to improve their decision processes and performance. Hotels and hotel brands alike are coming to the realization that if you continue to craft operational strategies based solely on historical data, then you are ignoring upcoming trends and may repeat history – whether you like it or not.. Considering the past couple of weeks of group bookings outlook, it may be wise to seek guidance from the future 12-month horizon as an input into their hotel decision making support.

Committed occupancy for the next four quarters is up 4.1% year-over-year while group pace bounced back from a dismal showing last month. At this point in the booking window (3/27/11 as-of date), Q4 is showing the highest year-over-year gains in committed group occupancy. The positive committed occupancy outlook continues through Q1 2012. After dropping 12.9% year-over-year last month, group pace turned positive with an 18.6% increase over the same time last year. Group committed room nights are 3.7% higher over the prior year during the next four quarters. RevPAR growth, based on second quarter booking activity, is poised to jump 8.1% year-over-year.

While RevPAR is widely recognized as the most important hotel performance measure, one could argue that the second most vital measure is channel delivery. CRS contribution is generally the key performance metric that major hotel brands publically disclose every year in their Franchise Disclosure Documents. Understanding and acting on channel level opportunities is a key driver of performance. Based on Rubicon’s Channel Insights and MarketVision Demand Position data, there are interesting facts and observations that speak to both past and future channel performance. For the purposes of this analysis, we defined Central Channel Delivery as the percentage of room nights originating from distribution channels in which the brands have either direct control (Brand.com and Voice) or influence (GDS & OTA). The charts below illustrate that central channels delivered approximately two thirds of industry room night volume at a $17 or 14% ADR premium to those walk-in or property-direct booked rooms sold during the first quarter. CRS contribution declined by a full percentage point from the first quarter of 2010 because a 9.3% year-over-year increase in GDS demand was not enough to offset declines in voice and OTA channels, while web demand grew more modestly than property-direct (+8.4% YoY). In these times of lowest Internet rate guarantees and rate parity rules in brand standards, it is also interesting to note that the average OTA rate was $31 or 22% lower than the average Brand.com rate. OTA remained the smallest of the five main distribution channels in Q1 2011 with market share of industry room nights down 70 basis points from 2010, while the industry’s largest channel, Brand.com, grew 20 bps from last year.

How can hotels better manage channel performance? Rubicon sources its information directly from the brands' reservations and property management systems, providing a complete 360- degree view of the source channels, as well as the ability to isolate market share of individual on-line travel agents and GDSs. Among the major players in this space, Priceline retained the largest (30%) market share of OTA channel room nights during Q1, despite declining by 108 basis points (bps) from last year. Expedia was the top market share gainer, up 133 bps from last year to nearly 27%. Another popular topic when discussing channel delivery is overall system delivery including loyalty programs, particularly in benchmarking loyalty program production against competitors. Hotel chain loyalty programs contributed well over half of the industry branded room nights during the first quarter at a $13 or 10% ADR premium to non-loyalty program members. Loyalty program contribution increased for the fourth straight quarter after declining through much of the recession.

The evolution of hotel industry performance benchmarking will lead to real share gains not shift. Our data allows for a holistic approach to understanding the various distribution channels, interactions between them and how they correlate to your pricing, sales, marketing and revenue management tactics. Hotels can, and are now optimizing channel mix to control distribution costs in the context of intelligent sales blitz or promotional campaign planning, thus shifting the results measurement focus from operating ratios such as RevPAR and RevPAR index to financial statistics such as gross profit margin and return on investment. While past performance analytics has its place, insights gleaned from proactive market intelligence can be more advantageous in elevating long-term brand equity. After all, the only room demand and revenue share that you can “steal” are those that have not yet checked-out.

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 Rubicon, a Travelclick Company

Rubicon (www.RubiconGroup.com) offers the broadest and deepest collection of market insight in the travel industry today. A leading provider of competitive market intelligence, market analysis and revenue management products for the global travel industry, Rubicon integrates competitive market information into the business planning and revenue management practices of its customers. Its premier solution, MarketVision, offers a comprehensive suite of services that addresses market positioning in terms of price, demand and channel. Rubicon's publishing arm, IndustryIntel™, provides insights from the world's largest repository of future demand and cross-channel pricing data.

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