The summer season that spans Memorial Day through Labor Day is traditionally a peak travel time for North America. What looks different this year compared to last year? With forward-looking data gathered from hotel companies participating in MarketVision Demand Position, we examined the overall trends for June-August this year versus the same time last year, including business demand versus leisure, and performance by chain scale.
As of May 1, 2011, North American hotels have 4 percent more rooms committed this summer compared to last summer. Average daily rate (ADR) is up 3.3 percent, while RevPAR is up a healthy 5 percent year-over-year. These trends are promising and bode well for summer hotel performance.
With the overall summer statistics promising, we took a deeper look to review the composition of that positive growth. How much of the demand growth is from business versus leisure? As the U.S. economy continues to recover, and companies have loosened travel restrictions, business travel continues to improve year-over-year. Committed occupancy for the business travel segment is up a strong 8 percent for the summer months while leisure demand is basically flat, down 0.3 percent versus last year. Despite the difference in demand between business and leisure, the ADR growth for both segments has identical increases of 5 percent over last summer. Business segment RevPAR is up 13 percent versus leisure up 4 percent. Clearly business demand is driving the positive year-over-year summer statistics likely due to the increased costs of leisure travel (higher hotel rates, higher airfare and higher gas prices).
When reviewing the data by chain scale (luxury, upper upscale, upscale, upper midscale, and midscale), all chain scales lost leisure rooms versus last summer. Demand in the luxury segment has stalled while the traditional value segment, midscale, is growing – up 16.4 percent in demand compared to last summer. Further, midscale saw an increase in ADR of 4 percent year-over-year. This again, is likely due to the price consciousness of the leisure traveler.
The data indicates that this has been and continues to be a two speed recovery – strong business growth but lackluster leisure performance. With forward-looking data, hoteliers can better manage their seasonal business by understanding the complexion of the demand by channel and segment to take swift action and gain a competitive advantage.
Charles Buffington is vice president of sales and marketing for TravelClick.