The bookings drive demand and benefit accommodation providers and consumers, says Julie Cheneau, director, market management for UK & Ireland at Expedia Lodging Partner Services
Hotels are always looking for new ways to drive demand – and packages have been a solid vehicle to do just that. Packages, or combined hotel, airfare and/or car bookings, offer valuable benefits to hotels, as well as consumers, but there’s a lack of industry information around how hotels can strategically manage this demand. Between the first quarter of 2016 and the first quarter of 2017 alone, there was over a 35% increase in demand for package stays in the UK and that demand is likely to continue growing in the years ahead.
Historically the traditional package booker was often a travel deal seeker. Today, budget and luxury travellers alike find package booking both cost and time efficient. These travellers also tend to take more trips and/or spend more than those who buy just a flight, hotel or other single component.
Expedia took a deep dive into more than 12 months of its first-party data, comparing package demand to standalone hotel demand from global points of sale inbound to UK properties. Here are our key insights:
Packages drive increased revenue – Average Daily Rates (ADRs) – a common performance metric for hotels – for UK package stays were higher versus standalone stays by an average of almost 20%. This shows a substantial rate boost for hotels – and an incentive to include their hotels in package offerings.
Packages equate to longer stays, and booking windows – UK package bookings typically have almost twice the length of stay than a standalone hotel booking, making them an attractive source of incremental demand for hotel partners. Package demand also typically has a booking window more than one and a half times longer than standalone hotel bookings, providing more opportunities for hoteliers to upsell to consumers – both prior to check-in and on-property.
There are fewer cancellations – Since the hotel stay is commonly linked to a non-refundable flight, packages tend to have lower cancellation rates compared to hotel-only bookings. This is especially important for hoteliers, particularly during a time when consumers are paying for travel insurance or potentially booking refundable, standalone hotel stays in a separate booking to get the most competitive rate.
Less decline in ADRs – Consumers have been bombarded with information pushing last-minute bookings for great deals or discounts, but how can hotels benefit and drive incremental revenue with packages? Expedia’s data shows that package demand can benefit hoteliers – while still delivering a great value to consumers. As the booking window shrinks – from six months to 30 days out from stay – the ADR drops for standalone room nights, but actually increases for packages.
So how can hotels be even smarter about their package offerings? Here are 5 quick tips:
1. Hoteliers should try to load package rates a minimum of three months in advance, to take advantage of the lowest flight prices, offer the best value to customers, and avoid the discounting that inevitably happens for last-minute hotel deals.
2. Know how your market fits in: Hotels in major metro markets and near airports or convention centres are likely to benefit the most from packages. From a global perspective, the top five countries booking packages into the UK were the US, Germany, Italy, Netherlands and France.
3. Almost all travellers who search for both a flight and hotel within a 90-day period start their search with a flight. By far, the most popular package combination is lodging plus air, accounting for 99% of demand. A deeper look at the package breakdown by traveller origin reveals that UK travellers booking a domestic package are slightly more likely to include a car rental, in comparison to inbound travellers.
4. Differentiate yourself: With the typical package booking paid for in advance, the customer likely has more funds available to spend on-property, whether at the restaurant, bar, spa or on activities. There are numerous ways that hotels can stand out from their competitors and attract more ‘looks and books’ – target guests with special discounts, promotions and complimentary amenities leading up to their arrival.
5. Lean on the pros. Expedia has an army of Market Managers that know the intricacies of their market – from seasonal trends and events, to what works and when for their hotel partners. Smart hoteliers can input package options that deliver a compelling offering that meets the specific needs of their customers.
*When looking at markets with min 1000 room night stays. All data based on demand for the 12 months ended March 31, 2017 unless otherwise stated.
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