Hotels.com sees signs of consumer retreat

Hotels.com has seen a slight drop in the average length of stay among its customers, with many bookers also trading down to cheaper accommodation.


Nigel Pocklington, EMEA managing director for hotels.com, was talking to Travolution about hotels.com’s Hotel Price Index, released this week.


The survey analyses prices actually paid by customers at 68,000 hotels across 12,500 locations.


The headline finding was that, across the world, hotel prices in Q3 08 were on average 3% down on Q3 07, the first drop since the survey was launched in 2004.


Hotels.com worldwide managing director David Roche appeared on CNBC, saying that there is no drop in the number of bookings coming through at the moment, although customers are trading down or cutting their stay. Pocklington confirmed that for EMEA transactions were “holding up year on year, with growth still in the double digits, and that there was a ‘slight drop’ in the average length of stay.


“It’s consistent across all points of sale,” he said, adding “apart from Iceland!”


The weakening of sterling against both the dollar and the euro has accelerated since the survey was completed.


Pocklington said that hotels.com was able to adapt its marketing spend to take advantage of currency-related demand changes. “Our marketing is flexible,” he said. “Tripadvisor, paid search, you can change in a day and we’re always looking across Europe to find the openings.”


The sharp drop in sterling has hit UK – New York traffic and length of stays, although Pocklington said that traffic to the US from eurozone countries in the run-up to Christmas was stronger than last time.


The currency issue is also affecting how hoteliers price their inventory. “This year, hoteliers tried to hold their rates until May or June, but they dropped through Q3. And they are more willing than ever to drop their rates,” he said. “US hoteliers in particular are aware that the current exchange rate is impacting demand.”


As customers trade down their accommodation, Pocklington expects hoteliers to try to drop their prices to pick up more trade. The HPI’s consumer message was that there are deals out there for consumers, although the UK has yet to see any benefit because of the forex issues.


However, UK hotels are seeing more business, as domestic properties become more affordable relative to overseas. “We are definitely seeing a lot more searches and bookings for the UK,” he said. It has recently signed a full inventory deal with eviiv.o, adding 2000 b&b’s and guesthouses to its UK offer.


Pocklington added that there wasn’t a similar trend towards increased domestic travel in other European countries. “We book more New York from Ireland than we do Dublin,” he said.

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