Distribution Strategies

Leisure travel average daily rate (ADR) has shown positive growth for the first time globally since the recession hit, increasing just over +1%, according to July’s The Pegasus View from Pegasus Solutions.

Published: 03 Sep 2010

Leisure travel average daily rate (ADR) has shown positive growth for the first time globally since the recession hit, increasing just over +1%, according to July’s The Pegasus View from Pegasus Solutions.

Citing pent-up demand, July 2010’s The Pegasus View also indicates leisure bookings – those made online/through alternative distribution systems (ADS) – entered double-digit growth territory with an increase of more than +10% over last year.

Together, the increase in booking volume and ADR helped revenue realise double-digit growth of nearly +12% over 2009.

“We were pleased to see the look-to-book ratio in the ADS slow its growth during July from the +50% we saw in May and June to +35%,” said Mike Kistner, chief executive officer of Pegasus Solutions.

“Have leisure travellers stopped shopping for the best value? Certainly not, but they’re definitely more willing to buy. This is evidenced not only by diminished growth of the look-to-book ratio, but also by the very encouraging ADR, revenue and length of stay growth we saw in the ADS channel. As corporate travel has led the recovery, hotels need to make sure they haven’t forgotten how to woo the consumer. As we see it, they’re back too.”

The company also shared:

• Around the world, the ADS channel returned similarly positive results, with South America showing the highest revenue increase over prior year of +62.7%, and North America the smallest of +8.2%. Europe ADS revenue grew +29.0%, while Africa/Asia/Oceania by +23.7%.

• Global corporate bookings – those made through the Global Distribution Systems (GDS) – continued a double-digit growth streak with July up +24.5% over 2009. This volume is expected to continue increasing through the rest of the year at an average monthly pace of +30%, which, combined with an expected ongoing increase in ADR for the channel, will lead to estimated revenue growth of about +40% each month through the end of 2010.

Key Takeaways

1. Corporate travel shows continued robust recovery with no sign of letting up. July marks the fourth-consecutive month of global GDS booking growth at levels greater than +20% over prior year and ADR growth at or greater than +6% over prior year.
2. The leisure market demonstrated renewed energy in July. Global ADS reservations reversed the trend of lessening growth rates and returned to double-digit growth in July of +10.4% over prior year. ADR also showed positive growth for the first time globally in 2010 at +1.2% above prior year in July.
3. GDS forward-looking data provides reassurance of growing strength for the business sector. Bookings, ADR, length of stay and revenue all display increasing growth over prior year.
4. ADS forward-looking data displays on-going progress being made in the leisure market through year end. Booking volumes look to continue at a moderate pace, with ADR to finally stay ahead of last year for almost all of the remainder of 2010.