|Booms and Busts: The Challenges of Global Events.|
By Louise Osborne ~ Exclusive from ITB 2014
Tuesday, 25th March 2014
Exclusive ITB Feature: Over the past years the tourism industry has been impacted by events that have taken place all over the world with global effects;
From the European recession to the Arab Spring in the Middle East, the effects of such events can be devastating for hotels, travel agencies and destinations.
"The travel industry has always been susceptible to outside influences and it can have a huge and dramatic effect," Tony D'Astolfo (right), managing director of travel research firm, PhoCusWright, told 4Hoteliers.com.
Data from the effects of the 2008 recession in Europe show the number of bookings going down along with the length of people's stays, as people try to save money by deciding not to travel, or by staying closer to home, said D'Astolfo, although he said the situation was now starting to turn around.
"We've seen a number of different metrics affected in a negative way and now we've started to see those things come back up," he said.
"The memory of the recession is not out of people's minds, so I think there's a degree of caution that will need to be applied, but what our data seems to suggest is that Europeans feel vacations are a birth right and they are still going to attempt to take them," he added.
Another big event that shaped the way people have traveled in recent years was the Arab Spring, a series of revolutions that took place in countries including Egypt, Tunisia and Libya in the Middle East and North Africa and still threaten unrest in the region.
Such events affect demand forecasting and with it, predictions used for dynamic pricing systems, Fabian Specht, managing director of Europe Middle East Africa with revenue management company IDeaS, told 4Hoteliers.com.
"You can yield more when there's high demand, but if you're in a market where the demand is going down, where the destination is affected by something and people do not want to come you have a few days where you can exceed capacity," he said.
"Because of fewer revenue opportunities, you really need to stay tuned and apply the best revenue tactics to gain maximum revenue for those days."
However, he said that revenue-based solutions could adapt to the changes and re-forecast based on the new trend.
"Revenue is not only going up with the price, but it sometimes means that you have to be realistic and maybe go down or loosen up on your yield restrictions," he added.
Still, there are times where whatever a company may do to try to keep going in such situations, it will not be plain sailing.
"The airlines got most comfortable with reducing the number of seats and managing inventory better," said D'Astolfo. "But on the hotel side it takes five years to really build up a property, so it's not easy. They don't have the ability to say I'm going to shut down half my hotel, so it becomes more of a challenge for them."
This is strictly an exclusive feature, reprints of this article in any shape or form without prior written approval from 4Hoteliers.com is not permitted.
Louise Osborne is a correspondent and editor based in Berlin, Germany. She began her career working at regional newspapers in the UK and now works with journalists across the globe as part of international journalism organization, Associated Reporters Abroad (ARA). Living abroad for the second time, she continues to be fascinated by places both near and far, and boards a plane eagerly, as often as she can.
Louise writes a weekly exclusive column for 4Hoteliers.com