Industry Update
Opinion Article11 June 2021

The Volatile Travel Landscape Makes Agile Technology More Important Than Ever

By Gautam Lulla, CEO of Pegasus

share this article
1 minComments
Lulla

More than a year after the fact, it’s still stunning to look back at the performance figures across the travel industry from April 2020. Numbers cratered in every category. Overall RevPAR for US hotels fell to $17.93—a 79.9% YoY decrease from 2019. Business and operations teams were stripped down during that month, with more than 70% of hotel employees laid off. Airlines saw a 96% decrease in passengers. Search volumes for travel on Google fell to a fraction of their normal benchmarks. Agency spending and ad buying stopped for travel providers and third parties alike. Even having lived through it all last year, the figures seem impossible. The industry came as close to a total standstill as has ever been seen.

But the economy is heating up again with the summer weather, and the CDC keeps giving Americans more and more optimistic guidance about relaxing Covid-19 restrictions and regulations. Travel momentum is growing again, with paid search, website traffic, and bookings climbing for month over month over month. There is more reason for optimism in the industry than there has been since February 2020.

Hoteliers are eager to get back to business, but they also know that the path forward remains uncertain. Teams that used to plan their budgets and business initiatives 12 months in advance are now proceeding carefully month by month, intending to adjust and tweak tactics as they gather information. Guests are learning to interact with hotels through different channels, and they’re expecting different kinds of information and services from hotel staff than they have in the past. And hotel owners and executives are navigating a world where there’s no longer such a thing as historical data: nothing that will happen in 2021 or 2022 can be predicted by looking at numbers from 2020 or before.

In volatile environments like this one, flexible and adaptable technology is more important than it ever has been. Below are some examples of how conditions are evolving in various parts of the hotel digital environment, and how organizations with nimble technology will have an advantage:

Volatile Market Conditions at the Top of the Funnel

In many ways, it was the metrics at the very top of the booking funnel—Paid, Metasearch, and Social—that began the chain reaction that ripped through the industry. Between March and April 2020, searches for all travel-related topics fell to around 3% of their normal benchmarks. Without shopper traffic to prop up advertising, the whole market collapsed: aggregate digital advertising spend for Pegasus clients was down 98.33%. Third parties stopped spending as well, with hotels and OTAs each getting out of paid search entirely and shifting their remaining resources to Metasearch, compressing that market.

Now that travelers are searching and spending again, hotels will once again begin to compete for traffic with their comp set and with third parties. The market may also grow more quickly than anticipated: not only are all Americans eager to take their first vacations of 2021, there’s also an entire bumper reserve of postponed honeymoons, anniversaries, landmark birthdays, family reunions, and more that didn’t take place in 2020. Travel providers can expect those events to be re-finalized in the coming months, adding additional, unpredictable pressure to the top of the digital funnel.

With the expected volatility, marketers who want to be aggressive but still need to manage their spending closely will lean more than ever on advertising platforms with intuitive back ends and clear reporting. Bidding norms will need to be redefined in Paid, Metasearch, and on Facebook, with no real historical precedent to act as a guide. Those with outdated technology will not be able to compete. Hotels whose CRS is connected to their advertising infrastructure will have a clear edge, able to display real-time rates and availability inside ads to drive urgency and boost conversion rates.

Marketers, creatives, and branding agencies are still figuring out the right ways to tastefully promote and message lifestyle hotel experiences in the post-pandemic world, with all the F&B and socializing and nightlife that traditionally comes along with them. Analysts are tracking traffic metrics and ad prices on a daily basis, and things will change quickly. It is clear that hotels with best-in-class advertising tech and integrated platforms will have a major advantage.

The Shifting Purpose of Brand.com

As a natural byproduct of the drop in travel search, traffic volumes to hotel websites plummeted as well. But the direct channel was the most resilient channel during 2020, and has been growing in share in each month this year. In the post-pandemic environment, travelers trust hotels themselves over third parties for up-to-date, accurate information about travel policies and shifting Covid-19 regulations for the property and the surrounding neighborhood. Hotels will look to take advantage of this increased level of direct engagement and build trust with their visitors by ensuring their websites are as relevant and informative as possible for the new world.

In many ways, the core purpose of a hotel website is going through a fundamental overhaul. In the past, hotel sites have been almost pure exercises in branding, acting as virtual lobbies where a web visitor could experience the ethos of a property before setting foot there. Lush, striking visuals were the centerpiece, with infusions of clever, subtle copy—and of course tasteful conversion calls to action—acting as a highlight. Hotel websites have traditionally been more experiential than informative.

This has changed in 2021. Websites should still reflect their brand as truly as possible, but site visitors are now much more interested in clear information about things like reservation flexibility, cleaning procedures, and the availability of on-property amenities than they are in subtle branding touches. The same way that call centers are having their voice reservations agents communicate new, updated information on a near-daily basis to callers, marketers will need to work with operations teams and corporate policy-makers to make sure information online is accurate. We can expect local and CDC recommendations to change throughout the year and hotel procedures to adjust accordingly. The situation is fluid.

Having incorrect information on your website will constitute an enormous breach of trust for 2021 travelers, so having a website structure in place that allows for quick, simple updates is more important than it has ever been.

Pricing Uncertainty and a Shifting Channel Mix

Until 2020, every experienced revenue professional knew their market’s compression dates, how those weeks would pace across different channels, and the BAR rates they should be attempting to yield given the time of year. They knew the weeks that needed to be layered in ahead of time with low-rate business, which channels were strongest and weakest in each season, and if all else failed, the best ways for their property to move excess inventory at the last minute.

Going forward, revenue teams are flying blind. The same way pricing volatility will continue at the top of the market in the rush to acquire impressions and clicks, hotels will compete with one another on price in a chaotic rush to refill rooms. Hotel executives expect to manage rates and inventory across all of their channels more tightly and actively than in years past, rolling out discounts and promotions for specific dates and throttling channels as they learn about the market. There may be fewer opportunities for last-minute inventory dumps than there have been in the past.

In an uncertain world, flexibility and control are once again the top priorities. Revenue managers need to work with a CRS that allows them to manage all of their channels—including the fast-growing Voice channel—from one place. A user-friendly interface and efficient tools will be important, including the ability to change rates and create discounts on the fly. Advanced revenue managers and marketers will explore tactics for promoting offers only to specific kinds of traffic—for example, last-minute weekend getaways to web visitors inside a “drive market” radius—and to personalize rates and offers based on dynamic pricing rules, such as length of stay, lead time, booking device, and geographic area.

Hotels are going to fill up; there is no doubt about that. But the properties with the most agile CRS platforms and most well-integrated and automated e-commerce platform will be the most effective at pricing competitively, yielding the highest RevPAR, and recovering most quickly.

We’ve written before about how the post-pandemic travel landscape presents new opportunities for smart hoteliers. Constantly changing conditions will mean travelers will form new travel habits, including interacting with the hotel more frequently and booking directly

Hotels with an innovative outlook and flexible CRS and e-commerce platforms are set to take advantage. Now is not the time to be passive or reactive. The same standard, set-it-and-forget-it strategies of the past won’t work; they’re based on an outdated model.

There’s still time to be proactive about the coming market and put the right strategies and tools in place for 2021 and beyond.

Source

View source

Gautam Lulla

    More from Gautam Lulla

    About Pegasus

    Pegasus combines high-tech innovation with high-touch service to give hoteliers more control over their revenue and distribution strategy than ever before. Following their merger with Travel Tripper, Pegasus enables hoteliers to better connect with their guests through an innovative and flexible platform of Reservations, E-commerce, Global Sales, and Business Intelligence solutions that help hotels drive demand and increase revenue and profitability, including the Pegasus CRS, named Best CRS 2021 by Hotel Tech Report. With more than 30 years of experience in global distribution, Pegasus serves hotels across 120 countries from eight offices worldwide in New York, Scottsdale, Las Vegas, London, Paris, Frankfurt, Tokyo, and Hyderabad. For more information, visit www.pegs.com.

    Contact
    Nancy Huang
    Senior Marketing Director
    Send email
    Latest News
    Advertisements