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There’s More to ADR Calculations Than Meets the Eye

by Ed Watkins, Contributing Editor |

Seven trending hotel news stories that will impact your hotel Revenue Strategy.

1. WHICH TYPE OF ADR ARE YOU BENCHMARKING AGAINST?

Contrary to the good old days when an average daily rate calculation had real meaning, this author argues that hoteliers and revenue managers in particular need to understand that two ADRs actually exist: the guest-facing ADR, or the rate the guest actually pays for a room; and the actual net room rate a hotel receives after related guest-acquisition costs (agency commissions plus a variety of transaction fees and charges) are subtracted.

While both data points are important for different reasons, owners and operators need to understand how both numbers are calculated and how to use that data to maximize revenues and, more importantly, profits.

Full story at Hotel Online.

2. CHANGING INDUSTRY DYNAMICS PUTS FOCUS ON RM

The long-discussed shift in hotel industry dynamics—when new supply starts to outpace increases in demand—seems closer than ever. A resulting environment of lower occupancies and greater competition could cause problems for hotels and hotel companies without strong, disciplined, technology-based revenue management strategies.

The author suggests hotel operators move away from the no-longer-useful but common practice of Best Available Rate pricing with length of stay restrictions. Instead, he suggests a number of applicable strategies that can maximize rate growth even in a downward-moving industry environment. It starts, however, by attracting the best revenue management talent and by exploiting available technology.

Full story at Lodging Magazine.

3. 5 TAKEAWAYS FROM RSS

The recent Revenue Strategy Summit yielded five key takeaways:

  1. While owners are beginning to see value in discounted loyalty rates, some analysts don’t believe it’s the best way forward.
  2. Rate parity is still an important component in the distribution landscape, but it takes diligence to gain full value.
  3. Product consistency is one key to fighting the threat from Airbnb.
  4. Using data, operators need to craft personalized messaging to reach the burgeoning Chinese travel market.
  5. Benchmarking around Net RevPAR is the next frontier in measuring hotel success.

Full story at Duetto Research.

4. WHEN BOOKING, CONSUMERS CHOOSE DESKTOP OVER MOBILE

A new study of vacation booking habits of U.S. consumers confirms a lot of accepted notions but contradicts others, e.g., travelers booking online are “not so fond” of last minute offers. Who doesn’t like a deal? Anyway, here are other results from the study:

  • Travel websites are more likely to get bookings on Sundays, on which they have a 5% higher average conversion rate;
  • Users typically start searching for summer holiday destinations in January and winter holiday destinations in September;
  • Mobile traffic is growing, but desktop remains the preferred device to complete bookings;
  • Although more people use mobile to browse, the conversion rate on mobile is still 2x lower than on desktop.

Full story at Travolution.

5. HYATT, EXPEDIA COMES TO TERMS ON OTA AGREEMENT

Hyatt Hotels and Expedia have made peace. Faced with a July 31 deadline, the two parties yesterday reached an “agreement in principle” to renew their distribution relationship.

Hyatt threatened to sever ties with the online travel agency giant reportedly because it wasn’t able to get the same terms and conditions as did Marriott International and Hilton Hotels Worldwide in their negotiations with Expedia. The reason, of course, is the much larger scope and scale of those two mega-brand companies compared to Hyatt.

Full story at Skift.

6. GLOBAL DIGITAL TRAVEL SALES IN INCREASE 12% IN 2017

While some regions of the world—notably Western Europe and North America—are lagging, global digital travel sales are expected to increase 11.7% this year. Even within geographic regions, sales increases vary by country. Here are projected sales increases in select countries and regions:

  • Western Europe, up 5.7%;
  • Within Europe sales increases vary from 9% in Spain to 2.8% in Finland;
  • United Kingdom, up 7.2%, the second highest in the region;
  • North America, up 5.1%.

Full story at eMarketer.

7. STARTUP PROMOTES FLEXIBLE CHECK-INS, CHECK-OUTS

A new startup is promoting technology that allows guests to check-in and check-out at flexible times and charges them accordingly. According to the company, HotelFlex, hotel operators gain additional revenues by getting guests to pay a little extra to check in early to rooms that would otherwise be empty during the day.

The technology isn’t a booking platform; rather it is a service providing hotels and the property management systems they use with the technology to let guests book rooms with varying check-in and check-out times. In return, the startup takes 15% of any extra revenue generated by the hotel.

Full story at Tech Crunch.

Stay up on hotel Revenue Strategy news and discuss industry tech trends in the Hotel Revenue Strategy Leaders Group on LinkedIn.

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Ed Watkins, Contributing Editor

Ed Watkins, Contributing Editor

Contributing editor at Duetto
Ed has been covering the hotel industry for more than 40 years. He was editor-in-chief of Lodging Hospitality from 1980 to 2012. He then joined Hotel News Now as an Editor at Large, until his retirement at the end of 2014. Ed still contributes to several publications and is a member of the advisory boards for the hotels schools at Michigan State and Penn State.
Ed Watkins, Contributing Editor

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Ed Watkins, Contributing Editor

Ed has been covering the hotel industry for more than 40 years. He was editor-in-chief of Lodging Hospitality from 1980 to 2012. He then joined Hotel News Now as an Editor at Large, until his retirement at the end of 2014. Ed still contributes to several publications and is a member of the advisory boards for the hotels schools at Michigan State and Penn State.