Hotels that offer a combination of rooms and apartments will lead the growth of the hospitality sector in future, and may help to win back a customer base that has turned to alternative lodging in preference to traditional hotels.

This was one of the subjects spotlighted at Providence Hospitality’s recent Hospitality Optimisation Forum in Johannesburg, which dissected the latest trends in the South African sector.

“Alternative lodging and the short-term rental space have had a significant negative effect on growing hotel occupancy. Hotels need to be exploring the apartment hotel space so that they can take advantage of the trend and win customers back,” said Angus Baikie, Business Development Manager of OTA Insights, during a panel discussion on the issue.

Groups such as The Capital Hotels & Apartments, which offers a combination of apartment and hotel accommodation in Johannesburg, Pretoria, Cape Town, Umhlanga and Mbombela, are experiencing explosive growth.

“It is important to look not only at the traditional hotel offering. We pivot according to what the trend demands, and the trend we have seen is longer stays in apartment-style rooms; whether this be businesspeople who want to travel with their family, or groups who rent multiple-room apartments at a sharing price. This is why the industry is seeing so many apartment hotel groups opening up,” said Natalie Knight, Revenue Manager for The Capital Hotels & Apartments.

Change in revenue models

Another highlighted trend was the impact that the hybrid work model and bleisure preferences of travellers are having on the way hotels generate and forecast their revenues.

“We used to forecast on how we can make our budget, whereas now we are forecasting based on where the demand is coming from, and when and how we can optimise revenue during this demand period, not just from a price perspective but from an ancillary spend perspective as well,” said Theresa Prins, founder of revenue management company Revenue Resolutions.

Prins said hotels that still focused on fixed pricing rather than pricing based on supply and demand, were at a distinct disadvantage in today’s fluctuating business environment.

“It is in everybody’s favour, from the customer to the hotel, to have dynamic, supply and demand pricing. Static pricing is outdated and in places like the UK it is virtually non-existent,” said Prins.

Strategic use of tech for higher ADRs

Baikie pointed out that hotel groups had a “massive” desire to explore technology and start shifting away from the use of OTAs. “There is still a massive reliance on OTA business, but the demand and desire is to start getting more direct transactional business. So businesses are spending time on redoing their website or re-envisioning their booking engines,” said Baikie, adding that hoteliers were also using mobile platforms more strategically.

“Mobile discounts have been a norm for a while now but hoteliers are getting more strategic. They are taking advantage of new booking behaviour, using mobile as a lever to grow ADRs while offering higher rates on higher-yielding days for mobile business.”