Briefing: OTAs vs hotels in the rate debate

Rate parity agreements, which have allowed OTAs to match any low price openly offered on hotel sites, have recently been a sore point between OTAs and hoteliers.

This year, regulators across Europe have been scrutinizing these clauses. In July, France passed a law banning rate parity. Before this in January, a German Court upheld a 2013 decision to stop an OTA using a ‘best price’ clause.

This briefing offers a variety of perspectives on the OTA/hotel relationship:

Regulators who have been looking at these agreements include the Competition and Markets Authority in the UK, as well as Competition Authorities in France, Italy and Sweden.

In 2013 in Germany the OTA Hotel Reservation Service was stopped from applying a rate parity clause on the grounds that it restricted competition and did not benefit the consumer.

One way hotels have been able to get round these clauses is by offering discount to loyalty members. Ibis hotels is currently advertising that its website prices are 5% cheaper than anywhere else, but reading the small print, this is only if you have a membership card.

The British Hospitality Association has supported the decisions in France and Germany and has encouraged the UK government to follow suit.

They have argued that rate parity is unfair because, according to BHA, when an OTA matches a low room rate it is also taking up to 35% of the rate as commission. The organisation say agreements between hotels and OTA’s are, “too costly and one sided at this point.”

This Summer Expedia and Booking.com both announced pan-European changes to their agreements with hotel partners.

These agreements can work both ways, and stop OTAs offering reduced rates, and can also apply to other distribution partners such as high street travel agents.

There is still debate as to how much the removal of rate parity clauses will ultimately affect the enormous power of the OTAs.

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Video clips produced by ybc.tv for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Briefing: Healthcare, student housing, and hospitality

Hospitality properties are performing well this year, but outside of our industry, what other asset classes do investors have their eyes on?

There was 2.1% capital growth in UK healthcare property in 2014, and £4.2 billion invested in UK student housing in the first 5 months of 2015. Both sectors have had an increase in demand, with 16,800 more students in 2014 than 2013, and 11.4 million people currently aged 65 or over in the UK.

In this briefing three experts discuss healthcare and student housing and how it relates to hospitality:

According to the IPD UK Annual Health Property Index, healthcare property returned 9% in 2014. The Index also shows that in December 2014 there were a total of 1,073 Healthcare properties in the UK, with £3,957 million Capital value, and 41 funds.

Last year the Financial Times reported that there had been a particular rise in investment in the ‘UK’s £15.1bn-a-year care home market’. As discussed in the above video, there has been increased need for this type of property due to the increased aged population. According to the latest statistics from Age UK, there are now 3 million people are aged 80 or over in the UK. The number of people aged 60 or over is expected to pass the 20 million mark by 2030.

According to Savills, investment into student housing increased 23% 2013-2014, and increased 70% again in just the first 5 months of 2015. With a 3.4% increase in the number of applications for the current academic year, there looks to be a continued demand for this accommodation. The report suggests that the increase in purpose built student accommodation could help free up much needed residential properties.

As two examples of high performing sectors, both healthcare and student accommodation were discussed at the Hotel Alternatives Event this year.

If you’ve been sent to this page and you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do see here. It’s free.

Video clips produced by ybc.tv for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Briefing: Hospitality professionals start small & seize opportunity

In a Survey by the American Hotel & Lodging Association, more than half of respondents said 50% or more of their managers began their hotel careers in an entry-level position. Half said that 50% or more started in minimum wage positions.

With the growth the industry is seeing at the moment, job opportunities are coming in fast. Getting each new operation up and running opens up a variety of vacancies. New entry level roles could be the starting point for a great career for those applying.

In these videos four successful hospitality professional discuss handwork, dedication and passion for the industry:

More opportunities may become available within existing hotels if leaders are confident in the market remaining positive. The Barclays Employers’ Survey 2015 found that ‘77% of business still think that sales lead to job creation – as opposed to job creation leading to sales’.

It has been reported that the opening of the new InterContinental London – The O2 this year, would create 650 new jobs (including peak time temporary roles). The hotel is managed by The Arora Group under a franchise arrangement with the InterContinental Hotels Group (IHG).

A new hotel by the Beannchor Group in Belfast made local news for creating 100 new jobs, whilst in Glasgow a new Radisson hotel was reported to be bringing 60 new jobs opportunities to the area.

This summer, Travelodge created a new careers website in order to drive recruitment for 750 new jobs; 600 in existing hotel and 250 in new hotels to be opened before the end of the year.

One company pushing to get young people to start their career in hospitality is Hilton, which has an annual Global Career Awareness Month. In May they hosted 750 events globally reaching 90,000 young people.

If you’ve been sent to this page and you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do see here. It’s free.

Video clips produced by ybc.tv for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Briefing: Guest satisfaction – Meeting expectations

A new study from J.D. Power has found that the overall hotel guest satisfaction score in the US has risen to a record high of 804 out of 1000 in 2015.

It is a different story in the UK. A survey by Hotel Info looked at guest satisfaction scores in Europe. The UK only scored 7.39 out of 10, which put them second from bottom in the list and far behind the top ranked Slovakia, which had an impressive score of 8.22.

So what makes the difference in these scores, and how important is guest satisfaction anyway? Our experts discuss how to ensure guests have what they want:

J.D. Power’s 2015 North America Hotel Guest Satisfaction Index Study is in its 19th year and this is the first time the overall score has passed the 800 point, having risen 20 points from 2014. The factors covered in the score are; the reservation, check-in/check-out, guest room, food and beverage, hotel services, hotel facilities, and cost and fees.

The study suggests that there are two very important elements in achieving good scores. One is that staff anticipate needs and offer friendly service. The second is that the overall operation meets the guest’s expectations of that hotel. The expectation element will vary depending on the branding of the hotel, whether it is a luxury or a budget hotel, and the cost. Guests expect to get what they pay for, and seek out good value.

The survey put The Ritz-Carlton top of the luxury segment, and put Microtel Inn & Suites by Wyndham top of the Economy Segment in the US.

Hotel Info’s survey of six million guest evaluations compared guest satisfaction in cities in the UK.  Sheffield had the highest score in the UK at 8.03 whereas the UK’s biggest market and capital city, London, lagged behind with a score of 7.12.

If you’ve been sent to this page and you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do so here. It’s free.

Video clips produced by yBC for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Briefing: The real estate perspective

A survey by Berwin Leighton Paisner earlier this year found that, 70% of hotel professionals believe hotels will continue to outperform “traditional” commercial property investments.

A separate survey by PwC ranked hotels number 6 for investment prospects in a list of 20 real estate sectors. 62% of respondents to the survey said hotels had either good or very good prospects. Serviced Apartments came at number 9 with 59% of respondents saying the prospects were good.

This briefing features professionals from the hospitality industry whose focus is on investment and ownership:

The Emerging Trends in Real Estate Report from PwC showed that London was the most active European real estate market in 2014. A global ranking showed New York was the top city for commercial property investment in 2014 with a sales volume of $57,012, and London was second with $42,889.

The report also highlighted issues and concerns in the real estate industry. 47% of property professionals said a ‘shortage of suitable assets to acquire’ was a significant issue impacting real estate business. 78% of European respondents and 80% of US respondents said ‘demographics and social change’ would have an impact on business decisions in the coming years.

In the US, real estate business prospects for multifamily developers were rated as good (3.9 out of 5). Business prospects for real estate brokers where rated at 3.91 out of 5, and private local real estate owners had prospects of 3.86 out of 5. Prospects across all business sectors listed showed an improvement on the previous year.

Within the hospitality industry, BLP’s European Hotel Market Survey 2015, found that; 80% of hotel professionals say hotels are becoming more of a valued asset class for investors, but are still perceived by many as risky. In the survey, 89% of respondents foresaw increased competition from the residential market with short term lets.

If you’ve been sent to this page and you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do so here. It’s free.

Video clips produced by yBC for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

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