© CEDIT. Mar Vila, Josep Francesc Valls, 2006 SPANISH AND EUROPEAN URBAN HOTEL STRATEGIES AGAINST...
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Transcript of © CEDIT. Mar Vila, Josep Francesc Valls, 2006 SPANISH AND EUROPEAN URBAN HOTEL STRATEGIES AGAINST...
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
SPANISH AND EUROPEAN URBAN HOTEL STRATEGIES AGAINST LOW COST OPTIONS
Evolution 2005-2006
Authors: Dr. Mar Vila, Professor, Department of Financial Management and Control, and Director, Centre for Tourism Management, ESADE
Dr. Josep-Francesc Valls, Professor, Department of Marketing Management, ESADE, and Director, International Tourism and Recreation SymposiumResearch Assistant: Marta Molist
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
Sample
Quantitative research: open-ended survey
Sample: 847 urban hotels associated with Keytel
Response rate: 11%
Error: 9,6%61%
39%Spain
Europe
3%
34%
54%
9%
2 ESTRELLAS
3 ESTRELLAS
4 ESTRELLAS
5 ESTRELLAS
26%
38%
27%
9%
Inferior a 50
Entre 50 y 99
Entre 100 y 199
Igual o más de 200
2 STARS
3 STARS
4 STARS
5 STARS
Less than 50
Between 50 and 99
Between 100 and 199
200 or more
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
Will prices have to be lowered in the future?
si no ns/nc
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
españa
europa
Yes: 16%No: 44%DK/NA: 40%
Source: ESADE-Keytel 2005
In 2005: “The future is somewhere between uncertain and not very optimistic: price reductions are expected (16%: 21% Spain, 11% Rest of Europe)”
SpainEurope
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
Did average prices increase more than inflation between 2000-2004?
Source: ESADE-Keytel 2005
23%
68%
9%
25%
65%
10%
20,00%
72,50%
7,50%
0%
10%
20%
30%
40%
50%
60%
70%
80%
YES NO Doesn't know / Noanswer
Total
Spain
Europe
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
Have average prices increased more than inflation from 2001-2005?
Source: ESADE-Keytel 2006
25%
58%
17%21%
59%
20%
31%
56%
14%
0%
10%
20%
30%
40%
50%
60%
70%
YES NO DK/NA
TOTAL
SPAIN
EUROPE
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
Price Variation 2001-2005
Nominal Values
Source: ESADE-Keytel 2006
SPAIN
14%
23%
23%10%
22%
8%EUROPE
11%11%
9%
29%
29%
11%
Decreased >20%
Decreased < 20%
Stayed the same
Increased <10%
Increased 10 to 19%
Increased > 20%
© CEDIT. Mar Vila, Josep Francesc Valls, 2006Source: ESADE-Keytel 2006
Have average prices increased more than inflation from 2001-2005?
Categories
0%
10%
20%
30%
40%
50%
60%
70%
3 ESTRELLAS 4 ESTRELLAS 5 ESTRELLAS
SINO
Ns/Nc
Yes
No
DK/NA
3 STARS 4 STARS 5 STARS
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
The pessimistic forecasts and doubt registered in 2005 are confirmed with respect to real average price evolution: In 2006, only present among 25% of the sample
Trend slightly improving, especially in the rest of Europe. Real average price has grown in the last 5-year period:
2005 2006
Total 23% 25%
Europe 20% 31%
Spain 25% 21%
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
In nominal values, In Spain, average prices have increased in 40% of cases, with an increase of up to 20% in 32% of casesIn Europe, they have increased for almost 70% of the sample, with an increase of up to 20% in 58% of cases.
By category, 5-star hotels are doing best: real average prices have increased for 35%
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
RevPAR Variation between 2001-2005
Source: ESADE-Keytel 2006
0%
10%
20%
30%
40%
Decre
ased
>20%
Decre
ased
< 20%
Same
Incr
eased
<10
%
Incr
eased
10
to 1
9%
Incr
eased
> 2
0%
SPAIN
EUROPE
Decreased: 38%Same: 10%Increased: 52%
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
RevPAR evolution in Spain is similar to that in the previous period among Spanish hotels
Source: ESADE-Keytel 2006
Fuente: ESADE-Magma, 2005
2005
39%
49%
12%
2006
40%
47%
13%
Increased Decreased Maintained
© CEDIT. Mar Vila, Josep Francesc Valls, 2006Source: ESADE-MAGMA
The previous year’s expectations have been exceeded.
32%
16%
52%
13%
40%
47%
0%
10%
20%
30%
40%
50%
60%
Same Increase Decrease
Forecasts Real
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
Hotel occupancy rates managed to improve over real average price evolution, although less in Spain:
Source: ESADE-Keytel 2006
Total Rest ofEurope
Spain
40%
71%52%
21%31%
25%
0%
50%
Average Price Increase RevPAR Increase
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
RevPAR decreased for 38% of the sample and increased for 52%.
In Spain, similar levels were maintained compared to the previous year and exceeded growth forecasts, from 16% to 40%.
In general, the occupancy rate compensated average price evolution, though less in Spain.
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
GOP Variation in 2001-2005
Source: ESADE-Keytel 2005-06
0%
5%
10%
15%
20%
25%
30%
Decre
ased
>20%
Decre
ased
< 2
0%Sam
e
Incr
ease
d <10
%
Incr
ease
d 10 to
19%
Incr
ease
d > 2
0%
SPAIN
EUROPE Decreased: 25%Same: 11,84%Increased: 63,16%
Decreased: 17%Same: 38%Increased: 45%
Improvement with respect to B.N.E. evolution 2000-2004
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
GOP for Spanish hotels exceeds the previous year’s forecast
38%
9%
53%
15%
56%
29%
0%
10%
20%
30%
40%
50%
60%
Same Increase Decrease
Forecasts Real
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
Total Rest ofEurope
Spain
56%
75%
56%
52% 70%
38%
0%
40%
80%
RevPAR increase GOP increase
Slight improvement in exploitation cost management, especially among Spanish hotels in the sample
© CEDIT. Mar Vila, Josep Francesc Valls, 2006Source: ESADE-Keytel 2006
RevPAR and GOP variation in 2001-2005
Categories
54%
4%
42%
52%
6%
42%
0%
20%
40%
60%
80%
100%
RevPar GOP
CUATRO ESTRELLAS
13%13%
75%
38%0%
63%
0%
50%
100%
RevPar GOP
CINCO ESTRELLAS
48%
10%
42%
35%
16%
48%
0%
50%
100%
RevPar GOP
TRES ESTRELLAS
Ha disminuido Se ha mantenido Ha aumentado
THREE STARS
Decreased Same Increased
FOUR STARS
FIVE STARS
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
GOP decreased for a quarter of the sample and increased for 63%In Spain, GOP increased for 56% of the sample, exceeding expectations.
It evolved better than the RevPAR, as a result of cost management.
Five-star hotels did best: RevPAR increased by 75% and GOP by 63%
Four-star hotels did worst: RevPAR decreased by 54% and GOP by 52%.
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
200615%
68%
17%
YES NO DK/NA
Source: ESADE-Keytel, 2005-06
2005
16%
44%
40%
Will prices have to be lowered in the future?
Future expectations improve. Doubt is confirmed as positive.Positions between Spain and the rest of Europe nearing each other; in 2005, the situation was more negative for Spanish hotels.
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
Can RevPAR be maintained in the future?
48%
34%
18%
Yes No, it will rise No, it will fall
SPAIN
53%
21%
26%
EUROPE
40%
56%
4%
Source: ESADE-Keytel 2006
For 18% of the sample, expectations are that it will drop. Greater pessimism in Spain.
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
Can GOP be maintained in the future?
SPAIN
52%34%
14%
46%
46%
8%
Yes No, it will rise No, it will fall
EUROPE
39%
61%
0%
Source: ESADE-Keytel 2006
More favourable perspective for GOP. Expected decrease in 8% of cases. Not expected in the rest of European cities
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
Source: ESADE-Keytel 2006
34,3%
47,8%
17,9%
46,0%
46,0%
7,9%
0%
50%
100%
RevPar GOP
Will increase Stay the same Will decrease
Future RevPAR and GOP Evolution
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
Source: ESADE-Keytel 2006
Future RevPAR and GOP EvolutionCategories
37%
42%
21%
53%
35%
12%
0%
20%
40%
60%
80%
100%
RevPar GOP
3 STARS
Will increase Stay same Will decrease
26%
56%
18%
41%
54%
5%
0%
20%
40%
60%
80%
100%
RevPar GOP
4 STARS
Will increase Stay same Will decrease
71%
14%14%
57%
29%
14%
0%
20%
40%
60%
80%
100%
RevPar GOP
5 STARS
Will increase Stay same Will decrease
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
Price Setting Strategies
SPAIN
0
1
2
3
4
Depends onmoment
Channel Competitors Costs Other factorsEUROPE
0
1
2
3
4
5
Depends onmoment
Competitors Costs Channel Other factors
Source: ESADE-Keytel 2006
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
13%
79%
8%
Any price Generally same Always same
Price Setting Strategies
SPAIN
13%
78%
9%
EUROPE
14%
80%
6%
Source: ESADE-Keytel 2006
2005
9%
87%
4%
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
SPAIN
2,5
3
3,5
4
4,5
5
How treated
Category
Personality
Quality
Hotel
Quantity
Cheap
Existing elements
Brand
The cheapest
Expensive
EUROPE
2,5
3
3,5
4
4,5
5
How treated
Hotel
Quantity
Personality
Quality
Category
Existing elements
Cheap
Brand
Expensive
The cheapest
Which characteristics to clients value most?
Source: ESADE-Keytel 2005
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
SPAIN
3
3,5
4
4,5
5
Impr
ove
facil
ities
Impr
ove
serv
ices
Bette
r com
merc
ialisa
tion
Bette
r coo
rdin
ation
with
Priv
. Sctr
.
Man
age co
mm
ercia
lisat
ion
mor
e
Bette
r bra
nd
Impr
ove
dest
. with
Pub
. Adm
in.
Streng
hthen
priv
. Gro
up
Train
pers
onne
l mor
e
Bette
r org
anisat
ion
EUROPE
3
3,5
4
4,5
5
Bette
r com
mer
cialis
atio
n
Impr
ove
facil
ities
Impr
ove
serv
ices
Man
age
com
mer
cialis
ation
mor
e
Bette
r bra
nd
Trai
n pe
rson
nel m
ore
Impr
ove
dest.
with
Pub
. Adm
in.
Bette
r coo
rdin
ation
with
Priv
. Sctr
.
Streng
then
priv
. Gro
up
Bette
r org
anisa
tion
Necessary improvements to increase rates
Source: ESADE-Keytel 2006
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
Current importance of the various commercialisation channels
Source: ESADE-Keytel 2005-06
3
3,5
4
4,5
Third party webpages
National travel agents
Own webpage
Representative
Direct sales
Reservation centre
GDS
Spontaneous
International travel agents
Tour operators
3
3,5
4
4,5
5
5,5
Tour operators
Own web
Direct sales
Third party webpages
Representative
GDS
International travel agents
National travel agents
Reservation centres
Spontaneous
SPAIN
EUROPE
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
0123456
Future importance of the various commercialisation channels
SPAIN
EUROPE
Source: ESADE-Keytel 2005
0123456
Ow
n web
Third party webpages
Spontaneous
Direct sales
Representative
National travel agents
GD
S
Reservation centres
International travel agents
Tour operators
Others
Direct sales
Ow
n webpage
Third party webpages
Representative
Tour operatorsN
ational travel agents
GD
SInternational travel agents
Reservation centres
Spontaneous
Others
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
In summary:
In the last five years, real average prices have only increased in 25% of cases, 21% in Spain, a slight improvement over the previous year. Price restructuring has its consequences.
Occupancy succeeds in improving real average prices, though less in Spain. RevPAR has decreased by 38% in general, 47% in Spain.
GOP has decreased for a quarter of the sample. In Spain, GOP increases for 56% of the sample, exceeding expectations. Its evolution exceeds RevPAR’s, the result of cost management.
By category, five-star hotels are doing best, RevPAR increasing by 75% and GOP by 63%. Four-star hotels are doing worst, RevPAR decreasing by 54% and GOP by 52%.
© CEDIT. Mar Vila, Josep Francesc Valls, 2006
For the future, forecasts are better than for the previous year; they are more positive in Europe than in Spain. Nevertheless, 15% of the sample expects prices to decrease, 18% a drop in RevPAR, and 8% a fall in GOP.
In price setting strategies, each specific moment determines the most adequate rate, generally being maintained at the same level.
If clients increasingly value how they are treated as well as the differentiated personality of the hotel, price increases should respond to improvements in facilities, the service offered and the hotel’s commercialisation. Or in the inverse order for the rest of Europe.
Third party webpages or the hotel’s own webpage gain ground as concluded in a previous survey. In the future, the situation will be similar for the hotels in the sample: websites and direct sales moving up. Tour operators lose ground, especially in Spain, though not as much in the rest of Europe.