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Pegasus View Highlights Importance of Raising Rates
Feb 01, 10 | 1:58 am
December GDS booking volumes, which predominantly represent business travel, increased +15.35% over 2007 and +6.28% over 2008; while ADS booking volumes, which predominantly represent leisure travel, jumped +22.49% over 2007 and +17.18% over 2008. In light of this recovery in booking volumes, the report highlights the importance of raising rates lowered in 2009 to drive demand, drawing parallels to the post-2001 recovery.
"Following a year that started with booking volumes significantly down, the meteoric rise in the latter half of the year to levels in both channels that exceeded even 2007 serves as validation that the recovery evidenced in previous editions of The Pegasus View is in fact occurring," said Mike Kistner, chief executive officer of Pegasus Solutions. "Many hoteliers find themselves again in the position of developing the most effective strategies to increase rates to a normalized level, which we address with observations and recommendations in this month's report."
The year started with average daily rate (ADR) down in both channels, leading to a resultant fall in net revenue. ADR climbed close to 2008 levels in the GDS as the year continued, leading to positive revenue movement of +5.34% for the second straight month year-on-year. However, a colossal increase in bargain-hunting and online shopping through the ADS left 2009 net revenue for the channel -21.92% below 2008 year-end.
Look-to-book ratios for the ADS continued to climb, growing +17.8% in December 2009 versus December 2008, and +54.7% over October 2008. This indicator relates directly to the rise in ADS booking volumes, as well as the channels' depressed ADR. Current indications are that look-to-books will continue to rise as travelers become increasingly rate conscious and savvy.
"We're enthused to see positive movement in booking volumes and ADR, but the rising look-to-books portends more pressure on technology infrastructure for travel suppliers. Not only does this competitive shopping environment require an aggressive dynamic rate strategy, but the ability to also handle the immense number of rate and availability requests to your system," added Kistner. "Rate and technology providers will need to ensure they are capable of returning the high volume of requests in the expected time, which some studies say is as little as two seconds."
Beginning with this month's edition, The Pegasus View will base aggregated ADR and revenue data on a single constant exchange rate, which more accurately reflects local, regional and summary movements in each currency.
The Pegasus View for December 2009 is available in its entirety online and by free subscription at www.pegs.com. Data reported in The Pegasus View comes from Pegasus Solutions, the world's single largest global processor of hotel transactions through the four GDSs and ADSs.
Pegasus is proud to celebrate 20 years of providing
Pegasus Solutions is the world's leading provider of technology and services to hotels and travel distributors, supplying the award-winning RezView® NG central reservation system, electronic distribution services, advanced agency commission processing and payment services, and hotel marketing representation services. Founded in 1989, Pegasus created and launched the hotel switch, and today its customers include more than 95,000 properties around the globe as well as a majority of the world's travel agencies. Additionally, Pegasus' powerful representation arm incorporates Utell® Hotels & Resorts and Utell Connect, services that have been chosen by nearly 11,000 member hotels in more than 130 countries, making Pegasus the hotel industry's largest third-party marketing, sales and reservations specialist. Pegasus also powers the niche consumer Web site www.hotelbook.comTM, dedicated to promoting independent and boutique hotels throughout the world. Headquartered in Dallas, Pegasus has 18 offices in 11 countries, including regional hubs in London, Singapore and Scottsdale, Arizona. For more information, please visit www.pegs.com or www.utell.com.
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