Currency fluctuations are the norm. Exchange rates have always peaked and troughed. So why do hoteliers hold their breath each time a major currency, such as the pound sterling, takes a nosedive?
The pound plummeted against the dollar once again on 16 January, reaching a 31-year low as the U.K. currency dropped below $1.20. The pound also fell against the euro, dipping to €1.13.
Twenty-four hours later, following Prime Minister Theresa May’s delivery of her Brexit plan, the U.K. currency rebounded by 3% — its biggest one-day increase against the U.S. dollar since 2008 — to achieve $1.24.
At the recent Revenue Strategy Forum in London, industry leaders were found discussing the opportunities presented by a devalued pound. When one currency drops, another rallies, and for hoteliers in the United Kingdom now is a great time to be targeting travellers from the United States and Europe.Currency fluctuation a #RevenueStrategy boon for #hotels in post-Brexit Europe Click To Tweet
Oliver Jager, CEO of Forward Data SL, openly said: “Brexit is a currency opportunity for inbound travellers,” adding that hoteliers “need to be ready to embrace whatever is coming.”
Hold Rate When Fluctuations Favour Hotels
Demand for London, and other key U.K. markets such as Edinburgh, remains high, and hoteliers should be embracing this by holding rates and promoting themselves to markets that are enjoying greater value from a pound conversion rate.
Those travelling from the United States, or countries with a dollar-pegged currency, such as the United Arab Emirates, will enjoy better value for the money from a U.K. or European vacation this year. U.K. and European hoteliers need to capitalise on this with combined Revenue Strategy and marketing efforts.
A recent roundtable discussion on Hotel News Now saw industry leaders debating the impact of currency fluctuations on the P&L as well as revenue and marketing strategies. Philip Wooller, STR’s area director for the Middle East and Africa, raised the issue of targeting different source markets.
He remarked that currency fluctuations require hoteliers to adjust their offerings and revenue strategies to attract the right guest at the right price and at the right time.
“Opportunities arise in times of uncertainty,” he said, “and it really is up to the hoteliers and their teams to think out of the box in order to benefit.”
Related Video: Duetto’s Chris Knothe suggests ways to partner with OTAs to reach potential guests and travellers from foreign markets:
Domestic Versus International Pricing
The currency conundrum also raises the issue of split-level pricing. Many hotel markets the world over offer favourable rates for domestic travellers. With the current value of the pound making travel to Europe more expensive for Brits, the “staycation” is presenting a fast-growing market that hotel revenue managers should be tapping into.
One thing is for certain: Currency fluctuations are a common occurrence. Hoteliers need to look for the opportunities these changes present. Target markets that can see a value for money in your offer, without you having to discount your price. Consider how you price and promote your product to domestic travellers.
Consider the four Ps of marketing: price, product, promotion and place. Bring these together to create a powerful proposition for those looking to ride the currency wave this summer.
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Tags: ADR, Average Daily Rate, Brexit, conversion rate, currency fluctuation, EMEA, euro, Europe, Forward Data SL, hotel marketing, Hotel News Now, Hotel Revenue Management, hotel revenue strategy, London, occupancy, Oliver Jager, pound sterling, Revenue Strategy Forum, staycation, STR, U.S. dollar, United Kingdom