London 2012 Update
Following up our London 2012 post, according to new data from STR Global the summer Olympics appear to be helping London’s hotel performance after all. From 27th July to 5th August 2012, hoteliers across London reported 87.7% occupancy and £216.42 (US$335.18) ADR. This represents an increase of 3.2% and 87.1% compared to the same days a year ago.
“However, Heathrow and Gatwick, in the west and south of London and therefore less convenient for Olympic venues, have reported occupancy declines for the Olympic period.” said Elizabeth Randall Winkle, managing director of STR Global.
Online Travel Agents hit by European crisis
Global economic weakness, in particular in Europe, took a toll on online travel agents this week. Shares of OTAs such as Orbitz and Priceline were smashed by investors after the companies had published weaker profit outlooks. These reflect in part consumers’ reluctance to spend on leisure travel while uncertainty remains over many of the world’s largest economies. Moreover, the weakness of the Euro against the U.S. Dollar has reduced the value of international bookings which account for most of Orbitz’ and Priceline’s business. For example, 60% of Priceline’s hotel online bookings come from Europe.
Online travel agents receive higher commissions from hotel bookings than airfares and airlines have an advantage over hotels as they are able to adjust to changes in demand by decreasing capacities.
Shares of other online travel sites also plummeted on Wednesday. Expedia’s share price dropped about 5%, as did shares of TripAdvisor and Kayak.
Expedia’s Traveler Preference programme
Expedia’s new payment model and potential impact on the hotel industry was also discussed this week. The Expedia Traveler Preference programme could put the relationship between hotels and online travel agencies under renewed pressure. The new technology will allow travelers to choose whether to pay Expedia at the time of booking (and Expedia will pay the hotel) or upon checkout (and the hotel would pay Expedia post stay). The model is similar to what the Priceline Group offers via Booking.com: travelers reserve a room with a no-fee cancellation policy and then pay the hotel after their stay.
Some hoteliers remain skeptical, particularly with regards to the model’s commission structure and cancellation fees. Commissions paid to Expedia will be the same whether the traveler pays at time of booking or upon checkout. Hotels criticize that Expedia is applying a merchant commission to an agency model.
Joie de Vivre Hotels reward rebels
Guests at 6 Joie de Vivre Hotels in the U.S. Southwest can take part in the chains’ Ditch campaign and tweet an excuse for ditching their everyday responsibilities taking a photo upon arrival wearing a disguise provided by the property. The best excuses and photos will win a 2-night stay at one of the hotels. The contest will continue until 15th November.