The Key to Success in 2017?

Transient Rate Growth.

The Key to Success in 2017? Transient Rate Growth.

Inflection Point

The hot topic at all industry events so far this year is predicting how many more positive years are left in this historic RevPar growth cycle. Conventional wisdom is that, broadly speaking, the hotel industry will see at least a few years of growth at a modest 1-3%.

For the first time this cycle, supply growth is equal to demand growth, with supply trending upwards and demand trending flat to negative.

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Management Strategies

What are hotel revenue teams doing to manage through this phase of the cycle? First, they are focusing on profitability through rooms margin management primarily by deploying better channel mix tactics.

Second, they are working to deliver transient segment rate growth. This is because transient revenue is growing much faster than group; plus, overall occupancy will remain flat at this point in the cycle.

So, the best way for hotel revenue and marketing teams to achieve RevPar targets is though growing the gross transient rate.

 

It’s a Real Challenge

Nothing is ever easy, but colleagues and customers are sharing with us how particularly difficult it is to deliver “same store” growth in this environment. Revenue and marketing teams are stressed.

That’s why trying different things is so important now. Because utilizing the same revenue and marketing strategies to deliver high levels of transient rate growth is not going to get the job done.

Certainly this is a basis we see particularly with new customers for nSight. And, to be sure, we are just one of many things hotel and revenue teams should be trying to price and market smarter.