Duetto: Demand and booking pace up, review scores down

The latest edition of the Pulse Report, which compares data from May with April of this year, and cross-references this with previous years’ performance, shows that lodging demand and pricing are moving in a positive direction, and booking pace remains off the charts.

Interestingly, over recent months last-minute bookings have been a lot less common and, while many travelers still procrastinate, we are seeing a lengthening of the booking window as it returns to pre-pandemic patterns of advance purchase.

However, guest review scores are sequentially declining due to numerous operating headwinds. Hospitality guest satisfaction reached record-high levels before the pandemic in July and August 2019. But, similar to most industry performance metrics, scores fell off a cliff in March 2020 and troughed in August 2020. The trend sequentially improved until May 2021 and then turned negative, reaching a historic low in November 2021 after the Delta variant peak. Global hospitality guest satisfaction trends progressed at the start of 2022, down only -2.5% from 2019 levels, but then in March of this year, the downward slope returned, now -3.5% off of 2019 guest satisfaction levels. It seems that customer expectations are returning to normal while owners and operators seek ways to best compete in the new normal.

North America
In terms of web traffic, the U.S. showed a 31% month-over-month gain for stay dates over the second half of this year, including a 51% jump for July. The turndown ratio of regrets and denials remained lowest among global regions at 18% in May and the brand.com web conversion rate, or ratio of number of bookings divided by the total number of visitors, remained healthy at 5%.

U.S. RevPAR exceeded its 2019 benchmark for the third consecutive month in May. Month-over-month booking pace trends continued to show a strengthening of demand but the lower ADRs on recent bookings indicated a possible return to the pre-pandemic practice of discounting closer to arrival date to fill rooms (e.g. to meet loyalty program redemption thresholds), called rate erosion.

Web traffic for LATAM was marginally higher in each of the next four months before turning negative for stay dates starting in October and the turndown ratio of regrets and denials averaged 22% in May with the brand.com web conversion rate at 4%.

Booking pace increased over the prior month in every month for the rest of the year except for October, with OTB committed occupancy up over the prior year in every month until December.

The biggest story in this region is that May was the first where Europe’s industry trading reached a pre-pandemic level. Month-over-month booking pace increased by triple digits in each of the next three stay months and averaged a global region leading 121% for the entire second half of the year 2022.

In terms of web activity, there have been no signs of a slow down with elevated interest for stay dates over the summer months of June, July and August. The turndown ratio of regrets and denials averaged 26% in May with a strong brand.com web conversion rate of 5%.

In terms of web traffic, activity was up by 13% and 20% for May and June stay dates respectively, and nearly doubled for July. However, the turndown ratio of regrets and denials in APAC remained highest among global regions at 34% in May.

Booking pace trends are exceptionally strong over the next three months but on-the-books (OTB) committed occupancy remains weak. However, a strong ADR growth propels RevPAR higher, relative to 2019 levels, in December of this year.

“One of the hotel industry’s shifting landscapes pertains to the diverging trajectory of guest satisfaction and RevPAR recovery trends,” said Lloyd Biddle, director, product marketing, Duetto. “Lodging demand and pricing are moving in a positive direction while guest review scores are sequentially declining due to numerous operating headwinds. Commercial teams should be proactive in thinking about what kind of long-term ramifications this challenge is going to have on the guest experience and the ability to drive growth. After all, the amount that a guest pays influences their level of satisfaction. Commercial strategy can only come to life if we put the guest in the center and aggregate all the data points across the journey.

“There is an old saying in the hospitality industry that ‘today’s booking pace is tomorrow’s RevPAR result.’ While still true today, the post-pandemic commercial strategy evolution broadens these parameters to a refreshed industry adage that ‘today’s consumer searches are tomorrow’s guest reviews.’”