Majority of Bookings Come Through Direct Channels
While leisure travel has been the lone saving grace for the hotel industry since the onset of the COVID-19 pandemic, hotel sales and marketing experts believe the business mix could grow more diversified in 2022.
Over the past two years, the hotel industry has seen little to no corporate transient business, but hoteliers say that could change this year.
Will Traywick, vice president of marketing at Prism Hotels & Resorts, said there's indications of a slight shift. It's anticipated that most markets in the U.S. will realize an increase in business travel compared to 2021 and 2020. However, there will be a continued focus on the strength of leisure travel.
Who is Traveling and Why
In 2020 and 2021, Traywick said there was an uptick in social group travel as certain jurisdictions eased restrictions. Business on the books now shows 2022 will have more corporate groups thrown into the mix of those who are willing to travel, albeit on smaller scales than in 2019.
"All of our sales leaders have been in very close contact with our meeting and travel professionals, whether it be group or business transient, through the entire pandemic. What we're hearing from a lot of larger negotiated accounts is that they're not even returning yet back to the office," he said.
He added those that are traveling for meetings are doing so because it's essential.
"We do see some of the smaller companies — local negotiated accounts — are willing to have more regional, larger groups," Traywick said.
Gilbert Arredondo, divisional vice president of revenue strategy at Remington Hotels, said his company is starting to see more corporate and convention group bookings for April and onward into the second quarter of 2022. However, he said it's not "back to normal but closer to back to normal."
"I think everybody is still cautious about [first quarter], especially with the most recent variant," he said. "Going into , we're seeing our sales group booking levels return back from booking as much business in October and in November of  that we did in 2019 for future months. Granted, on top of that, leisure is still very strong."
Certain segments like medical, construction, oil and gas stayed healthy during the pandemic but other segments like technology are picking up, he said.
Urban and large gateway markets continue to lag in terms of occupancy and revenue per available room compared to 2019 levels, he said. From a year-over-year perspective, though, urban locations are growing after being severely depressed. New York and Chicago are two specific markets that are ramping back up.
When the White House lifted the travel ban for vaccinated international travelers on Nov. 8, 2021, Arredondo said that did result in an uptick in bookings for February, March and April 2022, but it's important to note that international travel has a longer lead time.
"We do fully expect that urban, gateway cities will see more international travel in late [first quarter] and early [second quarter] if not sooner," he said.
Depending on the class of a hotel, he said the brands' cancellation policies will move back to what they were pre-pandemic little by little. A majority of Remington's resorts that are in high-demand markets, such as Key West and the Caribbean, will see cancellation policies as strong or stronger than pre-pandemic. But at the typical upper-upscale suburban hotel, there will be a hesitancy to move back to how it was in 2019.
Tracey Slavonia, chief sales and marketing officer at Middleburg, Virginia-based hospitality management company Salamander Hotels & Resorts, said her company is still seeing a surge of leisure travel as the main revenue driver.
Salamander Hotels & Resorts started seeing the group market shift in the fourth quarter of 2021 and into 2022, she said.
"The impact of vaccines and boosters has been positively felt in the group market, especially the marked return of small executive-sized meetings. Of course, the rise of the omicron variant has been concerning, but at this point, it's too soon for us to know if there will be any effect on either leisure and group travel. Our flexible approach has been highly successful throughout the pandemic and as we emerge from it, we will keep watching trends carefully and changing strategy as needed," she said in an email interview.
In 2021, demand for multigenerational travel increased across Salamander's portfolio, especially at Salamander Resort & Spa in Middleburg, Virginia; Hotel Bennett in Charleston, South Carolina; and Innisbrook Resort in Tampa Bay, Florida.
These bookings are still up significantly going into 2022, she said, and her team is not experiencing discount-seeking in the market.
"In fact, it has been quite the opposite as there has been a tremendous call for suites and packages that add additional elements like club-level accommodations, spa treatments and multiple rounds of golf," she added.
Traywick said his company has noticed early on that many transient bookings are coming through third-party partners.
"With that being said, the leisure traveler has become quite savvy at times, they're already online doing their research, and they're proven to book everything online, whether that be from our hotel website or through an online travel partner. In some cases, we are seeing up to 80% of a hotel's or resort's revenue per month come from an online source, [which] is a combination of a hotel's website or an online third party," he said.
Slavonia said Salamander has always prioritized direct bookings and its three-year trend analysis shows an overwhelming majority of its business continues to be direct channel bookings.
"In 2021, room night volume was up 15% over prior-peak 2019 overall, with 76.5% of that business resulting from direct bookings," she said. "We have seen some gain this past year driven by robust leisure demand, supporting a greater share of market through our travel adviser partners and online channels," she said. "Recent growth aside, we're still maintaining strong direct contribution, which we anticipate this continuing into 2022 even as the group segment recovers further."
Arredondo said Remington is working to leverage its customer relationship management to pull away from offering discounts through marketing and instead provide more personalized messaging around what's open during COVID-19 and where guests can visit.
Since the second quarter of 2021, he said Remington has ramped up its marketing spend and it continues to grow. As of now, the marketing spend exceeds 2019. The biggest areas of focus are driving direct channel bookings and improving visibility on Google.
"We're trying to capture that customer right at the entry-level point," he said.
While there has been turnover in sales and marketing teams across the hotel industry, Arredondo said this became an opportunity to fill his staff with people who are bringing in fresh ideas from outside organizations.
"What I always tell my team is if you look at marketing, look at it as 'does this resonate to you? Would you buy from us?' If you wouldn't buy from us and it doesn't get you to want to click, then let's revisit it," he said.
Traywick said leisure travelers want an experience — such as dining or well-being — and they're not as concerned about getting a deal or the lowest rate. One thing that Prism has done during the pandemic is showing its customers what those experiences are at the resort or hotel.
When lookers turn into potential bookers, Prism's goal is to convert them and make the sale.
"We have fully leveraged social media from an organic and paid standpoint to acquire new customers, whether it be transient or that social group," he said.
Slavonia said Salamander Hotels & Resorts' strength is its ability to be nimble and flexible to reach a dynamically changing customer base. Each property in its portfolio is required to have its own unique strategy based on customer targets and locale.
"We know our responsibility is to deliver results for owners and investors. As a result of our approach, in 2021, we have seen record-breaking figures," she added.
Her company is a firm believer in spending smartly to generate both visibility and revenue. To continue to achieve those results for 2022, she said Salamander is particularly focused on further developing high-quality assets that showcase each destination.
New brand initiatives are also in place as Salamander expands out west to manage the Aspen Meadows Resort.
"Our dedication to high-quality marketing is born out of [CEO] Sheila Johnson's extraordinary consideration of even the smallest of details. It is exactly that fine precision applied to each element of our guest experience at Salamander that easily spills into our marketing initiatives," Slavonia added.
Attracting International Travelers
Slavonia said Americans often visit Salamander's Half Moon resort in Montego Bay, Jamaica. When the U.S. adjusted its policy to require all people entering the Caribbean to show a negative COVID-19 result taken within 24 hours, her team had to communicate that it was a simple process.
"We even provided a concierge service right on property for testing. Staying abreast of the changes in travel policies for our feeder markets has allowed us to quickly pivot our digital marketing strategy to appropriately target international travelers," she said.
Copyright 2022 CoStar Group. All rights reserved. From https://www.costar.com. By Dana Miller, Hotel News Now.