Driven by demand and assisted by rate growth, business travel revenue rose by more than +40% over January of last year, while leisure revenue jumped nearly +15% over the same period in 2010.
The report also forecast growth in business and leisure bookings through mid-year based on business on the books. Forward-looking data for bookings made through the mostly corporate global distribution systems (GDS), show an average monthly growth rate potential of more than +20% through the second quarter. Average daily rate (ADR) for the channel will continue at the same or an even stronger pace than that realized in Q4 2010, while length of stay (LOS) will also expand.
“The travel industry’s rebound is a direct result of a healing economy and increased corporate travel,” said Mike Kistner, chief executive officer of Pegasus Solutions. “As corporate profits and competition return, companies are sending executives and sales teams back on the road. The accompanying growth in length of stay and booking lead times suggest more of these trips are made of group travel, conferences and meetings, which are a boon for hotels.”
The outlook for the leisure market also reflects positively for hotels. Bookings to-date made via online channels, or the alternative distribution systems (ADS), show increases of more than +10% over 2010 through spring and into summer. ADR in this channel will continue a slow and steady climb as well, while LOS will remain static. Look-to-book ratios, a product of online consumer comparisons and transaction processing inefficiency, continue to grow by over +40%, and will remain an issue for the industry.
“Consumers will travel as much or more in the coming year. A strong, but slightly smaller majority will also spend as much or more on travel in 2011 than in 2010 – they plan to spend, but spend wisely by shortening trips or aggressively shopping rates,” added Kistner. “Hotels would do well to examine their revenue management strategies to make sure they don’t risk losing the business or revenue to be had with inapt rates that are too high to sell rooms, or too low to make a profit.”
Data reported in The Pegasus View comes from billions of transactions processed monthly by Pegasus Solutions, one of the world’s largest global processors of hotel transactions. It reflects data drawn from both GDS and ADS transactions, representing the business and leisure markets respectively for approximately 90,000 hotels worldwide.
