Assured Hotels January 2022 demand report – New Year solutions for hotel revenue growth out of the pandemic

Since our last demand update report in October and the onset of the new variant, we have experienced the familiar cycle of media-driven hype smashing consumer demand, which in our sector means stagnation and regression of hotel room revenues.

Whilst the worst numbers on infections and pressure on the NHS is probably yet to come, the Government’s stated balanced strategy with no plans to shut the economy means we can thankfully plan a way through all of the noise to the spring and the return of better trading conditions in conjunction with learning to live with the virus which has quickly become a possibility. In our last report we targeted March 2022 as the time when conditions will probably allow a level playing field for growth towards pre-pandemic trading, and despite the chaos created by the Omicron variant, we see no reason to change this timeframe.

Ensuring sales strategies are robust so that a property can exceed its fair market share and not resort to rate dumping is critical, so we have used SiteMinder’s World Hotel Index tool with a continued focus on UK regions and cities to update as follows:

• UK comparison compared to a broad global trajectory, Germany & France, both with similar-sized economy & population and a larger international economy in the United States.
• UK City update with the expected drop in demand following the damage caused by the new variant and media reporting following “Plan B” measures.

So, a simple update of the current UK performance compared to other similar size economies shows we are faring ok, but at just over 76% of 2019 of trading before the pandemic and 1st lockdown, we all appreciate that 25% down on a normal January is gloomy indeed, particularly as cash reserves will be depleted from a difficult festive season.

We have also detailed some initiatives with solutions and partnerships that have been successful in supporting our projects, whilst looking past some of the sensationalised reporting in parts of the media and any misinformation by sticking to what we can control. Separate to revenue growth we cannot either ignore rising inflation and its effect on supply chain and pricing, lack of staffing and skills resources while the Government support is starting to fall away, and no likelihood of anything further coming from no. 11 Downing Street, but we will comment on that separately.

As always, all current booking trends are compared to 2019/20 actuals given this is where we aspire to get back to, as we are all too aware that post-March 2020 and the 1st lockdown doesn’t provide an adequate growth target.

UK compared to the Rest of the World.

Booking Momentum – very broad numbers show the UK roughly 25% down on a normal January demand.

Observations: whilst ahead of some comparable markets this makes for challenging trading, where comparisons to January 2019 show the lack of volume.

UK Cities focus, regional disparity highlights need for location-specific planning

We have seen again how sensitive consumer demand is with the Government and media messaging killing the momentum we were enjoying into the autumn; however, we have also seen that works both ways and the pent up consumer demand will be triggered to return with a bounce once that messaging changes and conditions allow. Particularly last summer in line with the road map, leisure demand led to successful summers for many operators and we have the added incentive in the spring of domestic and international business travellers returning for the first time in earnest for 2 years.

The table below shows that on the 4th of January demand fluctuated between 54% (Glasgow) and 95% in Bristol – this will be driven mainly by differing covid related controls in England and Scotland and a New Year bounce, however, highlights the need for a specific sales recovery plan depending on location and the external factors likely to affect a business into that city or its surrounding region.

Most of these larger cities will be reliant on the return of international travellers to achieve pre-pandemic trading, and we are seeing continued relaxation to allow for that over time – hopefully, the news last week where the travel industry is putting pressure on Government to relax testing regimes for the vaccinated to allow easier travel will have a big positive impact to demand volumes.

Booking Momentum by City – the table below compares daily bookings made as a % of the year 2019/2020, comparing momentum across a section of different UK & international destinations.

Support for your Revenue and Sales strategy

To support getting sales and revenue growth strategies right we have dedicated revenue management and proactive sales resources available on a flexible basis. A member of our team could join the hotel team for as little 4 hours a week which would also have a big impact in reducing payroll costs and removing some of the current challenges of staff shortages.

We have listed below some sales and revenue growth initiatives we are working on, Assured Hotels retain a skilled team of revenue and sales personnel ready to support, advise and implement on agreed activity including:

• Rate strategy review – will current pricing plans deliver the best volume and margin from the local market conditions?
• Distribution review to include: OTA’s, GDS partner and challenge content on own and partner websites.
• Franchise or soft brand support options review.
• Pay per click and key phrase campaign review.
• Database cleanse and campaign content planned and distributed.
• Flash sales and other high impact, strategic campaigns.

This is just an illustration of where Assured Hotels can support sales and revenue teams – if you or a client has a hotel business, we are well placed to give an impartial sense check of rate & distribution strategies for a very low commitment on cost to ensure all opportunities are maximised as the sector recovers, particularly in relation to revenue driving profit forecasts as Government support is removed.

As always, the data used paints a very broad-brush picture, particularly as it only uses daily rooms sold as a macro indicator and does not include rate or therefore revenue analysis. This broader data is also available to us across all UK regions.

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Please do not hesitate to contact us to discuss finance reporting & forecasting, procurement, sales and revenue management, funding, and Government support.

Please click here to book a meeting, email mgriffin@assuredhotels.co.uk or call 0203 916 5658.