31 January 2022 | BI and data analysis, Pricing strategy, Industry news, Market Insight, Data science
Travel in 2022 may still be cloaked in uncertainty. But as many popular destinations look towards recovery later in the year, forward-looking forecast data shows signs of increasing demand. For hotels, having the right pricing and promotional strategy in place can help to capture early demand, and turn lookers into bookers. A dynamic, proactive pricing strategy, gives hotels opportunities to stay ahead of the competition, especially in an industry subdued by the pandemic.
Using OTA Insight’s Market Insight solution to gauge consumer sentiment based on flight and hotel searches, we can see that Thailand and Australia have seen the highest increases in searches over the previous 7 days. Armed with this information, and advanced rate intelligence from OTA Insight’s Rate Strategy feature within Rate Insight, we can look into the pricing strategies employed by hotels in these destinations, as they try to ramp up occupancy, after a two year window of low demand.
International travel-dependent Thailand looks set to start again from February 1st, when some travel restrictions are relaxed and quarantine-free travel resumes. The country’s test-and-go regime, which had been put on hold after the emergence of the Omicron variant, will resume for vaccinated travellers. For hoteliers, there may be good reason to be optimistic. Let’s now look at what the data reveals.
Since the announcement, flight search data from Market Insight, shows a 22% increase in flight searches to Bangkok and a 21% increase in hotel searches from the previous week, with most of the traffic coming from Europe. While 45% of the searches were for travel dates more than 90 days aways, there was an increase in searches for travel dates between 8 and 90 days ahead. Similarly, Pattaya saw a 23% increase in hotel searches from the previous week, and while just 16% of these searches were for the 8-28 day lead-time window, this was up by 3% from the previous week.
Between Bangkok and Pattaya, some slight variances in the rate strategy have been employed to attract prospective visitors. 42% of hotels in Bangkok are offering a non-refundable rate, while 25% are offering semi-flexible rates, indicating confidence that there is increasing demand and inventory will be used. Knowing that guests still want to book risk free, 25% percent of hotels in Bangkok offer free cancellation right up until the day of arrival, while 62% are offering free cancellation until the day before travel.
To further encourage travel and tie-in guests to a longer stay at their properties, hotels are offering discounts based on the number of nights booked. In Bangkok, for three nights’ stay, 43% of hotels are offering at least a 5% discount, with just 9% offering a discount greater than 5%.
Meanwhile, in Pattaya only 12% of hotels are offering free cancellation up until the day of arrival, although 53% are offering free cancellation up until the day before arrival. 39% of properties are using non-refundable rates. Like in Bangkok, hotels in Pattaya are leveraging longer stays with discounts. While, just 37% of hotels are not offering any discount at all, 56% of properties are offering at least 5% discount for bookings of three nights. Across Thailand, nearly 90% of hotels are not using any mobile booking discounts, but for those that are, discounts are mostly between 5% and 10%.
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Since the start of the pandemic, international travel to Australia simply has not been an option. Strict regulations prevented any inbound arrivals, and even interstate borders were closed. And, with new travel advisories issued in January by the US and the European Council following the increase in local cases in Australia, travel to the country still looks uncertain. Despite this, forward-looking data from Market Insight shows that there has been increased search activity for flights and hotels within Australia.
Domestic demand continues to drive most of this activity, although there is heightened demand around the time of the Australian Formula One Grand Prix, during the week of the 4th of April. 44% of flight search activity originates in Europe, mainly the UK, though these flight searches did not transition into hotel searches. Instead there was an increase in GDS searches, by 22%, from the previous week for Melbourne. Hotel searches were dominated by domestic traffic. In the Gold Coast, search data reveals that there was a 48% rise in flight searches and a 37% increase in hotel searches from the previous week, and in Cairns hotel searches increased by 31%. Sydney saw a 20% increase in both flight and hotel searches, while in Perth there was an increase of 13%.
Hotels have adopted a dynamic pricing strategy as they try to navigate survival in a tough operating environment. In Sydney, 15% of hotels are offering semi-flexible rates, while in Gold Coast, just 5% of hotels are offering them and 10% are offering non-refundable rates. Roughly 30% of hotels in Sydney, Melbourne and Perth are offering non-refundable rates, signalling an uptick in demand, and confidence.
By the same token, 89% of Sydney hotels have a free cancellation policy, at least one day before arrival, reflected in the best available rate. Melbourne (84%) and Perth (83%) have similar policies. On the other hand, just 57% of Cairns hotels, and 51% of Gold Coast offer best available rates with free cancellation within 24 hours of arrival.
Length of stay discounts are another strategy that revenue managers are using to recover costs. More than 40% of hotels in Melbourne and Sydney have a two-night (LOS2) incentive, while in Cairns, 55% of hotels offer a discount for a two-night stay. While less hotels are using the LOS2 discount in Gold Coast, 16% of hotels offer a discount more than 15%. For a stay of three nights, 61% of hotels in Gold Coast are not offering any discount, and in Cairns, 40% of hotels are not offering a discount for a third night. Half of all the LOS3 discounts in Gold Coast are for more than 15%, more than the other destinations where most hotels are offering lower discounts for a three night stay.
The median cost of breakfast at hotels in Gold Coast is also USD2.50 more than the median breakfast price in Melbourne, Perth and Cairns. At USD 16.80 it is also more expensive than Sydney, where the median breakfast price is USD 15.20. Additionally, hotels are offering mobile discounts to encourage bookings, with 21% of Sydney hotels offering between 5 and 10% off mobile bookings. However, 84% of hotels in Melbourne, Perth (86%), Cairns (88%), and Gold Coast (85%) are not offering any mobile discount at all.
As hoteliers in both Thailand and Australia look ahead to market recovery, there is an opportunity for commercial teams to make use of forward-looking demand and rate intelligence data to stay ahead of the competition.
By tracking market demand with Market Insight, and the source of that demand, you can begin to see emerging hospitality trends, providing early opportunities to optimise your offers and convert those initial searches into bookings. Staying competitive in a market that’s constantly changing is more important than ever, and while competitors are employing dynamic pricing strategies, you can use Rate Insight to adjust yours, and successfully capture that demand.
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