OTA Focus on Price Is Misplaced, Expert Says
Fewer than half of business and leisure travelers believe they are getting fair value when they book through an online travel agency. The winners, according to Travel 2020: The Distribution Dilemma, are traditional travel sellers who provide the kind of personalized services OTAs have eliminated in the drive to automate sales. That’s the finding from a survey of more than 2,000 business and leisure travelers conducted by Frost & Sullivan for the IBM Institute for Business Value.
“The intense focus on price among many consumers has been extensively reviewed and discussed,” wrote lead author Steve Peterson. “What gets slightly less attention is the deeper cause of this price fixation: a misalignment of value. In aggregate, 93% of respondents to our survey indicated that getting value for their travel expenditures is important to them. The notion of value has a relationship to price, but the two concepts are distinct. Only 47% of respondents to our survey said their travel expenditures were well spent.”
Group Business Travel Is Still Slow
Meetings and other business-related group travel was in the doldrums even before news of the General Services Administration splurge in Las Vegas sent lawmakers scurrying to slash federal travel spending. According to STR, transient occupancy increased 4.5% in March, compared to the same period last year, for luxury, upper-upscale and upper-tier independent properties. But group business grew by an anemic 2.1%. Average daily rates saw a similar gap, growing 4% for transient business against 2.3% for group business. The reason: many companies are still holding fewer meetings than in past years, and the meetings that are being held tend to be smaller. The Global Business Travel Association is projecting a 3.3% rise in group travel spend for 2012 compared to a 7.2% increase in 2011.
Hotel Rates Continue to Climb
Don’t expect any relief on hotel rates this year. Revenue per available room (RevPAR) is up 15% over last year based on reservations currently on the books through the end of May, 2013. Transient business is up 7% year on year, with rate increases of 8.2% during the week and 8.1% on weekends. The committed occupancy for the second quarter is up 4.6% over last year and the average daily rate for this quarter is up 4.6% over the second quarter of 2011.
“Our TravelClick data has consistently shown increases in demand across all travel segments during this early part of 2012,” said Tim Hart, executive vice president, enterprise services and solutions, explaining projections from the TravelClick North American Hospitality Review last month. “Hotels are continuing to drive their bookings and target different types of customers to maximize their profits.”
U.S.-Europe Leads Global Air Volume
Air routes between the U.S. and Europe continue to lead the world in demand, but air travel within Asia is catching up fast. More than 60 million passengers flew between the U.S. and Europe in 2011, according to Amadeus Total Demand, an analysis of global travel trends. However, Asia leads in interregional growth, with a 9% increase in Asia-U.S. and Asia-Europe passenger volume and a 6% increase in Asia-Middle East traffic.
Eight of the 10 strongest routes are between cities within the same country, led by Jeju-Seoul (almost 10 million passengers) and Rio de Janeiro-Sao Paulo (about 8 million passengers). Seven of the top 10 routes are within the domestic borders of Asia countries – three them in Japan alone (Osaka-Tokyo, #3; Sapporo-Tokyo, #4; and Fukuoka-Tokyo, #6).
The only two-country route in the top 10 is Hong Kong-Taipei (#8) and the only non-Asian city pairs in the top 10 are Melbourne-Sydney (#5) and Cape Town-Johannesburg (#9). Beijing-Shanghai (#7) and Mumbai-Delhi (#10) round out the top 10 busiest city pairs.