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Boom Times in Australia, New Zealand are Right Time for Hotels to Bolster Pricing Power

by Vera Lye, Contributing Editor, APAC |

Down Under, times are good for the travel trade. As hoteliers in Australia and New Zealand reap the benefits of increased tourism, they also would do well to revisit and refine their pricing strategies so they have more power to hold and yield rate in the future, experts say.

According to Tourism Australia, the country recorded a healthy 6.8% increase in visitor arrivals in May 2017 over the same period last year. This brings them to a 9.2% increase in arrivals — translating to 713,000 more visitors — for the year thus far, compared to the same period last year. Not too shabby.

In New Zealand, it is a similar story. In June this year, it received 230,088 visitors, a 14.7% increase over the same period a year earlier, reported Stats NZ.

Analysts also see a positive future. Looking 10 years ahead, Australia is expecting an increase of 75% in international visitors over the numbers from this year to represent an annual growth of 5.8%.

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New Zealand’s Ministry of Business, Innovation & Employment (MBIE) is equally optimistic, saying visitor arrivals to New Zealand are expected to grow 5.4% a year, reaching 4.5 million visitors in 2022 from 3.1 million in 2015. Total international spend is expected to reach $16 billion in 2022, up 65.5% from 2015.

Hotel performance, not surprisingly, correlates with the tourism figures.

STR’s latest data for the year to date through June showed that Australia has had a 2.1% RevPAR growth vs same period last year, with Sydney, Adelaide and Melbourne in positive territory. Perth and Brisbane, however, reflected declines. Rate growth has been the strongest in Sydney, followed by Adelaide and Melbourne. New Zealand has recorded double-digit, rate-driven RevPAR growth led by Auckland and Queenstown, STR found. 

Don’t Forget a Long-Term Revenue Strategy

In such rosy times, what are the conversations around the table at hotel revenue management offices? Are we content with just making the little more from healthy occupancy rates, or are we still looking for ways to use Open Pricing strategically to create even more profit-making opportunities for our hotels? 

Even when blessed with buoyant demand, it remains critical for the industry to continue adopting best-in-breed technology and strengthen Revenue Strategy systems and people to maintain and grow market share.

“The danger is to look only at immediate short-terms gains, or be bogged down by traditional thinking,” said Murtaza Rangwala, regional director of sales for Australia, New Zealand and Pacific for Duetto.

“Every hotel — large or small, branded or independent, integrated casino resorts or limited-service apartment hotels — has the opportunity to improve revenue and profitability in high-demand, shoulder or low-demand periods without resorting to reverse revenue management practices or non-personalised volume-churning promotional tactics that erode loyalty and profitability,” he added.

He cautioned that even while the overall market conditions may be positive, not every property or location will get its fair share of the spoils. That’s because not every hotel is armed with the right strategy for sustained growth.

How to Drive Rate in a More Uncertain Future

When numbers are looking positive, and there is less pressure, it might be an ideal time to get the house in order. Get the basics right and establish good habits and practices so when it comes to crunch time, things don’t fall apart.

Integrate all consumer data visualizations and reports within a multi-tenant cloud architecture, rather than numerous spreadsheets emailed across the organization, to ensure a dynamic Revenue Strategy, Rangwala said.

Casinos, for example, can improve loyalty and profitability with personalised pricing for both gaming and non-gaming segments to drive total revenue and repeatedly get the most valuable customers into the resort.

Serviced apartments can also bolster their yield with Open Pricing, Rangwala said. As demand per room type fluctuates by day of week and segment, it is critical to have the ability to manage pricing by room type, number of guests, segment and channel, while varying incremental pricing without having to deal with the pain of clunky manual workarounds.

With Open Pricing, hotels can increase paid occupancy, reduce the self-inflicted last-minute cancellation trend, strengthen profitability with more effective channel strategies, grow brand.com bookings and reduce commissions payouts.

In essence, use the good times to further strengthen your pricing power in order to control your destiny in the future, Rangwala said.

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Vera Lye, Contributing Editor, APAC

Vera Lye, Contributing Editor, APAC

Contributing Editor, APAC at Duetto
Vera has been a travel trade journalist in Asia/Pacific for two decades, working in most of the major trade publications. She is now based in Sydney where she juggles her writing with managing her young son’s development as an aspiring tennis professional.
Vera Lye, Contributing Editor, APAC
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Vera Lye, Contributing Editor, APAC

Vera has been a travel trade journalist in Asia/Pacific for two decades, working in most of the major trade publications. She is now based in Sydney where she juggles her writing with managing her young son’s development as an aspiring tennis professional.