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Who is Your Guest?

The dynamics of who is staying where and for why is changing. Here is what you need to know.

Thursday, February 07, 2013
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We all know the hotel business is booming, but looking at specifically who that business is coming from isn’t something we’ve really dug in to. Until now. So who is that consumer knocking at your door?

Turns out there are a healthy mix of leisure and business travelers that are combining to make this a very robust time. Toss in ever increasing group business – those folks booking 10 or more rooms at time -- and we have a situation where all there major demand groups are doing what they need to do, demanding rooms.

“Despite micro economic uncertainty, hotels are expected to continue to regain their pricing power in 2012 and 2013,” said Warren Marr, Managing Director with PWC, who also mentioned super strong demand and limited supply growth as a contributing factor to today’s good times.

Recovering group business, however, is helping hotels push rates, even if a specific hotel does not focus on group business. “As group demand becomes more solid they can get higher room rates for the remaining rooms to sell to transient guests. Plus those with more groups displace transients which sends them to other hotels so [those hotels] can push rates too,” said Marr. “Lodging demand and lodging pricing remain headed in the right direction.”

According to Chris Klauda, vice president, lodging services, D.K. Shifflet & Associates, leisure travelers have really been a major business driver this century, which is a departure from the 1990s when the business traveler was the dominant driver.

And a big chunk of that leisure business is coming from non-vacation trips, which have become more popular in recent years. Klauda’s research points out that for personal leisure travel, 32 percent travel for special events such a soccer tournament, 28 percent are on the road visiting friends or relatives while 4 percent take trips for medical or health care reasons. Most interesting is that 10 percent are taking trips to events like personal improvement expos or conventions like ComicCon.

People are also vacationing more in spring and fall, which has created a much longer and stronger travel season. “Shoulder seasons are growing, it is no longer just summer. Even for vacations summer is still strong but many are pushing their trips into spring or fall,” she said.

D.K. Shifflet & Associates research also points out that while Baby Boomers make up the vast majority of travelers now, the coming of travel age for the millennial generation combined with the passing away of the Silent Generation is quickly changing the typical age of people traveling. By 2020 Millennials, Gen X and Baby Boomers will each be traveling in roughly equal numbers.

This means hoteliers will have to take several different approached to appealing to their target guests. It also means hotels will have to continually focus their properties on niche customers if they want to create strongly definable product, we believe.

One concern for hoteliers is social media of course. Many prognosticators say it is hyper critical to dive in to this emerging communication medium. But is it as important as many believe? For Facebook, Klauda said that less than 15 percent of online posts have anything to do with the hotel itself, which 50 percent post photos and 30 percent discuss travel experiences; which usually are more destination specific.

But it’s also more generationally specific. Just over half of all millennial travelers are posting while that number drops to around 35 percent for Genn X and about 22 percent for Baby Boomers.

As for Twitter, about 5 percent tweet on travel experience while about half that number tweet on hotels.

Marr said mobile is growing in popularity as a way to connect to hotels, but “the use of smartphones for travel arrangements is still in the early stages.”

“Consumers recognize the complexity of travel decisions and they are not reflected in current phone offerings. Mobile apps are starting to meet the needs of travelers and is rapidly advancing [as a booking source.]”

He said 57 percent of business travelers use a mobile device to access the internet for travel information which is up from 40 percent in 2010. For leisure travelers 38 percent use a mobile device to access the internet for travel information, up from 11 percent in 2010.
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