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Canadian Travel Press
Issue Date: Dec 04, 2017
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What’s the Next Big Thing?

That’s the million dollar question

[Editor’s Note: We asked The Hotel Insider to offer his take on the Big Surprise of 2017 and give us a hint as to what’s going to be the Next Big Thing. His column makes for some interesting reading.]

The Big Surprise
Let me preface this answer by stating that I am speaking from a strictly Canadian hotelier’s perspective. Now, we were all prepared for a busy year in 2017, with Canada celebrating 150 years, but the demand in 2017 was definitely off the charts, and this caused extreme compression in many markets across the country – Vancouver, Banff, Jasper, Toronto, Montreal, & Quebec were the biggest culprits – causing rate increases that have perhaps never been experienced in this country. There was simply a massive surge in demand into markets that did not have enough inventory for this demand. With a few of the markets noted having had their hotel inventory reduced over the last five years, the problem was further amplified.

Barber with the Wolfpack.

Obviously, the first way we had to adapt to it was to raise prices. This was straight across the board and was reflected in rates from the five star hotels all the way down to the most budget-conscious hotels. But hotels also had to find a balance to the delicate equilibrium between revenue management and sales, and ensure that their immediate revenue potential was maximized while ensuring that they can maintain more medium- to long-term relationships with key clients.
But assisting our international clients with creativity in their itineraries was perhaps the other most crucial response we had to execute in 2017. Due to total
lack of availability, groups needing Vancouver were instead housed in places like Surrey or Langley. Toronto and Montreal’s suburban locations in Mississauga, Brampton, Markham, Scarborough, Laval, Dorval, etc. were seeing the spillover from downtown, both for rate and availability issues. In Quebec City, clients were considering alternatives like Trois Rivieres. Banff often became a day trip from Calgary.

The Next BIG Thing
This is the million dollar question, literally.
There are so many topics that are important to our business right now, from Air BNB to changes in amenities. But from a hotelier’s perspective, the one item that I think is going to start affecting the industry in general is the desire of hoteliers to shift as many segments as possible to dynamic pricing, and this will have a tremendous effect on the travel agency, TMC and tour operator community.
Hotels and hotel chains have many motivations to make their revenue management efforts more sophisticated, and this goes far beyond traditional forecasting and yield management of the past two decades.
There is pressure from the ownership, management companies and brands to maximize revenue efficiencies more than ever. This seems to be indicating the death knell of traditional static or fixed rate pricing.
In the past, hotels have given various segments guaranteed, static prices that they can rely upon, whether it is for the corporate segment, TMC, travel agency or major tour operators. Hotels could count upon that business as a base and then yield remaining inventory according to market demand. Many hoteliers are now of the opinion that this is no longer in their best financial interest and are shifting to dynamic pricing, where prices can change constantly due to very high demand for their product.
For constituents in the leisure side of the business, this will make both quoting and advertising much more complex, as the rates of the hotels will be as disparate as airline seat pricing.
Finding the best value for their clients will be much more complicated.
For companies operating in the European Union, this will provide many challenges with their strict laws regarding published pricing.
For those in the corporate travel space, it will be the same challenge, providing the best value to their customers, and I would think that the back-end reporting will also become more complex as well. Agencies will have to work much harder to provide both accurate forecasting and budgeting for their hotel expenditures. Certainly in an age where everyone does more with less, this will likely create additional financial burdens on agencies when customers will continue to have high expectations in a competitive landscape.
Much of this is based on the assumption that global travel will continue to grow at current rates. Any major world event can quickly render this bullish philosophy irrelevant, if it has significant negative impact on willingness or ability to travel.

Eric Barber is the senior director, national sales for Realstar Hospitality, and he contributes a monthly column to Canadian Travel Press that offers an insider’s look at the hotel industry.