The online hotel sector is showing the strongest signs of surviving the economic downturn, according to members of the Travolution editorial advisory board.
Online hotel sector strongest say industry leaders
Travolution held the final meeting of the year of its editorial advisory board this month. Lee Hayhurst reports on the discussion about the current state of the travel sector and prospects for 2012.
The online hotel sector is showing the strongest signs of surviving the economic downturn, according to members of the Travolution editorial advisory board.
The performance of the sector is in contrast to flights which is the weakest performer, Dan Robb, Google travel industry head told the latest meeting of the board.
“Hotels is the area that’s held up strongest for us and the weakest would be flights,” he said. “We are not seeing the 30% plus reductions in people booking that others are reporting.
“I wonder where these shortcomings are coming from. Hotels are showing a 35% increases in queries year on year. It continues to be the highest growth area for us.
“And revPARs (revenue per available room) are very solid, or even slightly up, so people are booking at a higher rate at higher volumes.
“Hotel chains are investing. They are on a five-year plan so they have to play to the perceived future economic climate.”
Robb said the market was moving more towards component bookings, particularly as access to flight inventory was becoming more restricted as airlines look to cut out third parties.
Google’s view of the state of the market was endorsed by Matthew Crummack, the recently installed president of online retailer lastminute.com.
He said the consumer was looking to spend but to get more value for their outlay, meaning that deals like its Top Secret Hotels were proving popular. “The hotel sector is stacking up well,” he said.
“The dynamic in the hotel sector is quite different [from flights] in that you have an incredible amount of choice and fragmentation which allows consumers to spend a lot of time researching.
“With flights it’s a little narrower; you are generally going point to point, searching a schedule and a price.”
Crummack said the strong emphasis on hotels and deals has prompted lastminute.com to rediscover its roots as a late deals retailer of hotel beds.
The discussion turned to the recent attempt by Ryanair to freeze out online travel agents by using reCAPTCHA, an indication of increasing restriction of access to flight inventory generally.
Andrew Nicholson, Traveltainment UK managing director, said: “If they [Ryanair] are able to bring the wall down and close it off where else does the consumer go to get access? There’s no other airline that’s trade friendly saying we will open up our network.
“It’s the same for Thomas Cook and Tui. They will not distribute their crown jewels though OTAs.”
However, Robb said Ryanair’s approach has always been to be very vocal about its approach being to not build partnerships and then, over time, it becomes watered down.
“Ryanair’s model has always been ‘we do not need to do anything other than market ourselves as being cheap’. They want people to realise it’s Ryanair that has generated the cheap price [of the holiday], not the packager or the hotelier.”
Despite Ryanair’s reCAPTCHA verification step being considered a serious impediment to direct bookings, board members expected consumers to persevere to get the best prices.
Crummack said: “There is lots and lots of great product behind really poor websites. Consumers will ultimately persevere – they will find a way through.”
