Hospitality Sales and Marketing Association International
Hospitality Sales and Marketing Association International
 
Hospitality Sales and Marketing Association International
Demand and ADR

There is no singular reason as to why room rate growth has been stubbornly restrained in the current economic cycle. This is a complicated pricing world filled with lots of decision points for operators and revenue managers. However, there are a handful of factors to identify and a few more that are a bit subtler. They are:

  • High and increasing cost of customer acquisition
  • Room rate transparency through digital channels
  • Outward gazing (spending too much time looking at what your competitors are doing as opposed to establishing the value of your product)
  • Reduced booking windows
  • Daily occupancy patterns
  • Alternative accommodations
  • Revenue managers’ compensation and reward systems

Pricing in a digital and increasingly social world has changed the ADR growth paradigm. However, it still makes sense to find ways to enhance the industry’s understanding of pricing performance and behavior so that in future lodging cycles, room rate growth can track better with demand and result in a sustainable profit profile for the industry. Further, the added dimension of acquisition cost will factor into the quest for profitability going forward.

Excerpted from "Demystifying the Digital Marketplace: Spotlight on the Hospitality Industry," produced by Kalibri Labs through the AH&LA Consumer Innovation Forum and published by the HSMAI Foundation. Visit http://www.ahla.com/DDM/ to access this report available to HSMAI members. Use code: HSMAI2016