Advance bookings and refundable rates begin to return

Data and anecdotal evidence from a variety of companies in the hosting distribution ecosystem show that maybe both are true, but that there are some problems, even on the technical side.

Rikin WuFounder and Executive Director of DidaTravela global bedbank with more than 23,000 B2B customers, such as travel agents and tour operators who purchase hotel accommodation, comments:

“We are seeing two very important trends emerge this year that might have been unthinkable until recently: First, non-refundable fares are making a comeback, and second, travelers are starting to book earlier again.

“In the January-May 2019 period, non-refundables were about 59% of our sales, but that’s down to just 26% in 2021. Year-to-date, we’re looking at that number at 32% and we expect it to grow steadily.

“Meanwhile, advance bookings in the 8-30 and 30-plus day range in the January-April 2019 period were around 32% and 23% respectively, falling to just 10% and 2%. in 2021. This year around that time, we’re seeing those numbers go back up to 14% and 7% respectively, with 20% and 7% in May, so they’re still way down from 2019, but vastly above last year.

Confidence back?

“All of this is a strong reflection of consumers’ desire to travel and their confidence that they can take a trip, based on conversations with our B2B purchasing customers, such as travel agents and tour operators.

“But to a lesser extent, credit should go to hoteliers for pulling together attractive deals and pricing to entice the traveler back – they are eager to see non-refundable rates return to pre-COVID levels and we are seeing in conversations with them who push a lot for this.”

Ernest Siggfounder and partner of fitbooktravela consultancy specializing in the hotel accommodation distribution space, adds that:

“Obviously there has always been a demand from hoteliers to go back to non-refundable rates as soon as possible, but from the B2B distribution side: bed banks, wholesalers, business-to-agent platforms, resellers , the channel managers and connectivity technology providers that make up the entire ecosystem of how the vast majority of hotel rooms are sold; there is a certain level of reluctance to do so.

“Why? First of all, many still have unresolved disputes over who will foot the bill for non-refundable 2020 showing fees: OTAs and tour operators allege force majeure. So they don’t want to risk going back.” to have more disputes and potential liabilities, and taking that risk is definitely not in their model.

technological challenges

“But from a technology perspective there are also some challenges. Turning off the non-refundable option wasn’t that easy, but they finally figured out how to do it. Two years of software patches, upgrades, mergers and acquisitions resulting in transfers to new systems, new partner integrations, new CIOs, etc. later… Well, turning this back on isn’t that easy.

“Slowly but surely, though non-refundable is slowly making a comeback as buyers like travel agents and OTAs are open to that conversation again, but not least as hoteliers are pushing hard for it. In general terms, we see that in conversations we are increasingly asked “how can I make the right combination and not get lost?”.

Spencer Hanlonhead of travel niuma payment technology provider that helps OTAs, airlines and hotels with B2B payments, adds:

“We are now seeing the lowest levels of cancellations since COVID began. There were months in 2021 where that rate exceeded 40%, but this year it has been steadily declining and is now at just 1.74%, which is comparable to 2019.

“Let’s keep in mind that cancellations are not just a problem for a hotel because it doesn’t charge or has to find another guest on short notice. In fact, the entire challenge of refunding and updating your inventory is an administrative hassle that, one way or another, costs you money and reduces certainty.

Cancellations stabilize

“So, deep down it’s no surprise that now stability on cancellations is back, many want to go back to a model they’ve been using for decades and are finding ways to incentivize travelers to non-refundable fares through great deals. and prices. We’re likely to see more of this assuming there isn’t more volatility from COVID or anything else that shakes consumers’ desire to travel.”

Fabian Gonzalezthe founder and organizer of Forward_MADa luxury tourism conference held in Madrid every year, comments that:

“Luxury hoteliers around the world are starting to push non-refundable rates back through deals and promotions as they would like to see the percentage return to pre-COVID levels.

Especially since in the luxury sector, travelers can quickly change plans, leaving hotels that were full to suddenly leave them completely empty for no apparent reason.

“The challenge these days is to minimize the impact of free cancellation policies 24 hours before arrival. This will be a tough challenge though, as these luxury travelers have become accustomed to pay-on-arrival/refundable rates and generally “pay-on-demand” services for everything nowadays, including the transportation.

“We will see an increase in ABS (Attribute Based Selling) strategies, and a combination of pricing and exclusivity incentives which is probably the way to go, for example there is only one ‘Presidential Suite’ and if you don’t guarantee the hotel payment …they can’t guarantee you’ll get it! This will surely be a hot topic on the agenda at our next conference.”

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