Jan Freitag is the Senior Vice-President of Lodging Insights at hospitality data firm STR. Through his column at Hotel News Now and his many appearances at industry conferences, he offers insights into RevPAR, occupancy rates, and other data-related issues pertaining to hotels. He sat down for a Q&A with us to discuss the data and his forecasts for the coming months.
Q: The bulk of your work with STR revolves around data and benchmarking in the hospitality industry. What are the various roles data plays in the industry? What are a few things hoteliers can do with all that information?
STR is the premier provider of hotel operating statistics. For over 30 years, we have delivered actionable insights into competitive sets, markets, and countries to help our clients run more profitable venues. We believe that data is the fuel that runs the hotel industry engine. Our STR data permeates the industry, be it through weekly STAR reports that go to every chain-affiliated property in the US (and most chains globally), showing GMs and hotel leaders how their hotel performed, or trend reports that give developers a sense of market conditions in the areas where they plan to build.
Hoteliers use our data to look at room demand and pricing trends, and to get a sense of the forces that shape their local submarkets. Bankers, consultants, brokers, and vendors use our data to understand how macro-economic influences shape the hotel industry.
Q: We’re now a little halfway through the year, and your reports have shown that RevPAR is slightly up compared to what it was last October. How do you expect these numbers to change in the coming few months?
Yes, RevPAR is up, and we expect RevPAR to grow even further in the coming months and into 2017. The difference this year is that RevPAR growth is mostly (some will say exclusively) driven by ADR (average daily rate) growth. In the past — say 2014 and 2015 — it was also driven by occupancy growth. But because hotels are very full and we are selling more rooms than ever before, it is hard to grow occupancy. So ADR growth is the name of the game. But we are confident that RevPAR growth will be positive — around four percent in 2016 and over 3.5 percent in 2017.
Q: Lately, the booking war between hotels and the OTAs has really been ramping up, with a variety of big-name hotel brands — including Marriott, Hilton, and Hyatt — exhorting travelers to book direct. How do you think this trend will impact occupancy rates and RevPAR in the months to come?
It is too early to tell how the direct booking campaigns will impact the results of the participants. What is clear is that the direct booking channel is a much cheaper distribution channel than the third-party channels, and therefore should always be the hotel’s preferred channel. The questions is, as some would argue, how the industry reverses the trend that trained customers to assume the lowest rate is on the OTA sites. Is it too late for that? Clearly, the brands think otherwise.
Q: In your predictions for 2016, you said that check-in technology and keyless room entry were going to go big. Would you say this prediction is coming true? What other technological innovations do you think the hospitality industry can look forward to in the next five years?
Well, I am not going to say I was wrong — just early. I think the trend is still there, the interest is there, but the roll-out is taking time. I think other innovations we will see are around the understanding of the customer through very deep harvesting of their social media footprint and relating that to the CRM information that exists in companies. Distribution channels will always see their fair share of innovation. As long as the larger players in the space post healthy growth rates, there will always be startups who think they can build a better mousetrap.
Q: Based on all the data you’ve analyzed recently, what are your forecasts for the future of hospitality?
The future’s so bright, you gotta wear shades! In other words, I think that with the continued emergence of a middle class in developing countries and positive U.S. GDP growth, the hospitality industry will continue to thrive. I would not be too concerned about the negative headlines that seem to persist; I am a firm believer in the fact that people love vacations and always want to travel. In addition, business travel is a catalyst for economic growth, and, as we see in our group demand numbers, the road warriors are out, on the road, traveling and meeting.