“Out with the old, in with the new,” is a popular saying at the beginning of every year, but travel industry predictions show much of the new that is expected in 2016 consists of the further development of what was established in 2015. Parag Vohra, general manager of hotels for Sojern, provided six predictions for the coming year.
The big will continue to get bigger: Hotel companies are expected to actively buy and sell in 2016 to consolidate on size and distribution. This will continue the trend that gained momentum in 2015, when Marriott International, Inc., purchased Starwood Hotels & Resorts, and AccorHotels Group bought FRHI Holdings, Ltd., which consists of the Fairmont, Raffles and Swissotel brands. It’s anticipated that online travel agencies (OTAs) also will continue to merge, with Skyscanner, Hipmunk and HotelTonight unlikely to remain independent. During 2015, Expedia acquired Orbitz and HomeAway, TripAdvisor bought Viator and Sabre acquired Trust International.
Booking lead times will shrink, but the purchasing process will lengthen: In 2015, last-minute hotel bookings increased by 13 percent in the United States and 11 percent in Europe, while last-minute flight bookings also increased. And during the past year, American travelers spent increasingly more time purchasing hotel rooms. Americans now spend 25 percent more time choosing their hotel than they do when searching to book a flight. These trends are expected to continue or even accelerate in 2016.
Get ready for more hotel price wars: An abundance of rooms in New York City has triggered a price war among hotels there, and it’s likely to be seen soon in other key East Coast destinations. This is great for consumers, but not for the hotels’ revenue. In cities such as San Francisco, however, hotels continue to thrive. San Francisco saw a 7.5 percent rise in room rates in 2015, compared with 1.5 percent in New York City and a 5.2 percent average throughout the country.
Responsive design sites will emerge in hotels: Rather than creating their own mobile apps, hotels will offer responsive design sites that can dynamically adapt to all screens. This will enable hotel marketers to focus on driving demand to their single site rather than spending money on app downloads and updates. It’s particularly cost-effective for independent and boutique properties.
Expedia New York Hotel?: Online travel agencies will continue to flourish: Rather than concentrate on hotel rooms, OTAs will increasingly look to establish add-on services through property management systems, revenue management, restaurant bookings, tours, activities and more. Some might even establish their own hotel brands.
Airbnb will continue its monstrous growth: In 2015, Airbnb emerged as a growing threat for hotels worldwide in the leisure segment, even though its share of the overall room supply in Europe, Japan and other key markets is still relatively low. Airbnb has raised $1.5 billion in new funding and has a reported valuation of around $25 billion. The company is trying to attract more of the business traveler segment, but the impact isn’t likely to be seen in 2016.