The first Pegasus View report, based on data from July 2009, shows the overall pace of decline has slowed somewhat since early 2009, but that the industry is still in a difficult position compared to the same period in 2008.

"This tells us, we aren't out of the woods yet, but the forward-looking data allows us all to plan accordingly," said chief executive officer of Pegasus Solutions, Mike Kistner.

Pegasus View is the new monthly report from Pegasus Solutions, which processes more than 40 billion annual electronic hotel transactions and which is "finally opening the vault", says Kistner. "Pegasus sits in a unique position that allows us to track trends and forecast net reservations, length of stay, average daily rates and net revenues from both a global and regional perspective."

The first Pegasus View for July 2009 shows year-to-date (YTD), a global decline in net reservations, length of stay (LOS), average daily rates (ADR) and net revenues, with the most dramatic declines occurring in January and February. Hardest hit has been the GDS channel, which consists mainly of corporate and business travel.

Through July, YTD global GDS net reservations are down 8.43%, ADR has declined from $187.19 to $148.76 (20.53%), and, as a result, GDS net revenues are down 28.62%. Length of stay was off just slightly from 2.22 to 2.18 nights from a year ago.

"These numbers, along with feedback from our customers, evidence that globally, corporations have significantly curbed travel and entertainment spending in recessionary cost-cutting efforts. The GDS declines have also been steeper in Europe than North America," says

In the ADS channel, which is comprised mostly of leisure-based online travel distributors, 2009 started poorly, but has fared better since Q2. Through July, YTD global ADS net reservations are essentially flat, but have seen positive growth in four of the last five months.

However, ADR associated with these reservations is down at a greater rate than the GDS channel, going from $119.48 YTD July 2008 to $83.86 YTD July 2009, a 29.81% drop. This affects ADS net revenues, which are down 33.26% with LOS dropping from 1.85 to 1.76 nights.

Ric Leutwyler, chief marketing officer of Pegasus Solutions, and president of Utell® Hotels & Resorts, said this creates a good news/bad news scenario for the industry.

"The good news is ADS leisure traffic has not declined as much as corporate travel, and may actually be increasing. The bad news, at least from the hotel's perspective, is the majority of these leisure travelers are motivated by aggressive pricing and deals, as indicated by the steep decline in ADR and net revenues from the ADS channel. Consumers are shopping multiple online sites looking for the best deal, while online distributors are also shopping more rate/availability combinations," said Leutwyler.

Due to this scenario, there has been an exponential growth in the number of transactions processed versus the number of reservations received, or the look-to book ratio. Availability requests processed by the Pegasus UltraSwitch in July 2009 increased by 45% over the same period last year to a record 2.8 billion transactions, whereas the number of net reservations only increased by 7.2%.

"Aggressive shopping from merchant and opaque distributors, who shop more aggressively for inventory and the lowest possible rates, has hotels currently taking in 60% of the revenue they received last year for the same room this year. These declines are again more defined in Europe than North America, which has seen double digit reservation growth over the last two months," added Leutwyler.

Forward-looking data from August to December, compared with the same view from 2008, shows there will not be a dramatic improvement in ADR, LOS or net revenues from either the GDS or ADS channels, or from any specific region through the end of the year.

"The outlook shows we still have a long road ahead before a robust recovery. However, we anticipate continued growth in ADS leisure net reservations, which will likely continue to be fueled by aggressive shopping and catering to merchant, opaque and other discount-focused online distributors. Hotels will need to be vigilant about their pricing strategies to make this growth work for them," concluded Leutwyler.

The Pegasus View will be issued monthly to customers and made available to those that subscribe online.

http://www.pegs.com/ThoughtLeadership/The%20Pegasus%20View/The-Pegasus-View.html

Yeoh Siew Hoon, one of Asia's most respected travel editors and commentators, writes a regular column on news, trends and issues in the hospitality industry for 4Hoteliers.com.

Siew Hoon, who has covered the tourism industry in Asia/Pacific for the past 20 years, runs SHY Ventures Pte Ltd. Her other writings can be found at www.thetransitcafe.com

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