ÐßÐßÊÓƵ

Transcript

Introduction
 
Hi, Wouter. Welcome back to another Matt Talks. And today, we we're breaking the schedule a little bit because there is so much going on in the markets, and we're feeling so much anxiety from our hoteliers who are not sure what's happening. And we thought, let's talk about the macro climate and how that impacts travel.
 
And, obviously, travel as an elastic spend has, you know, if something happens in the market and people's spend goes down, they have to prioritize rent and buying these expensive eggs. And travel does take a hit often. So it is really important that we keep track of what's happening in the market. I've invited Wouter to join us from the other side of the Netherlands, and he's got a fancy title.
 
He's director of market research and intelligence. And everyone must be thinking, why does ÐßÐßÊÓƵ need a person like that? And I'm sure that Wouter can explain this to us.
 
Well, I don't know.
 
You came up with it.
 
That's called By the way.
 
Yeah. So, I think well, why do why does ÐßÐßÊÓƵ need someone like this? We obviously wanna know what's happening in the market. We wanna understand what trends, are playing in the market, what, our hotel customers and and prospects should be looking at, and how we better help them to, to achieve, as much revenue as possible, I suppose.
 
Yeah. Like, we always try and have an outside view, and and, really, we're trying to impact the businesses positively rather than just being a software vendor to hotel. We think, you know, what are the trends we're seeing and how do we build a product that supports that in the right way so that hotels can thrive when they use our solutions? And we really needed that outside view in, and that's where Wouter joined a couple of years ago.
 
Wouter, have you changed your holiday plans based on what you're seeing on the news today?
 
Not yet because I had already booked, and I'm actually going to Canada because my wife is from there. So I think that's all safe.
 
I'm very happy.
 
Planning to go south, though, down the border. But yeah.

Chapter
Economic overview: US and Europe
 
Great. So, what we wanted to talk about today is it's three kind of categories. One is what's happening in the economies, the major economies where we do business, so Europe and the US specifically. Then we look at some of the outside travel data sources that you have in hospitality, and then we'll look at what we have in ÐßÐßÊÓƵ Data. We've got lots and lots of data that we're obviously looking at deeply as well. But let's start with what's happening in the economy, specifically in the US. What are you seeing there?
 
Well, I think it's, I mean, it's an interesting question and, obviously, everyone wants to know and everyone looks at the stock markets and sees the major anxiety and uncertainty that's happening there. I think when you look take a step back and you look at it more long term, I think there's a few things that economists would say has a have a good reflection on how strong the economy is, and that's sort of GDP. It's it's the job market, and and you would think about sort of consumer sentiment.
 
If we look at those three data points, GDP seems to be holding okay, although we have to wait a little bit. End of this month, we'll know sort of how q one and and March was performing. But, up to now, inflation seems to be okay, etcetera. So I think the economy isn't necessarily right now impacted too much.
 
Jobs are very strong, especially in the US. The job market is extremely well represented and and, is doing doing very well. And actually numbers in March were better than expected even. So that's, again, is is a positive look.
 
Sentiment, on the other hand, is down, especially in the US. So there's a lot of studies being done on this, and consumer sentiment is low. But the actual effect on spending isn't being seen as of yet. And so, really, when you look at the numbers, things seem to be okay.
 
It's probably more of the the the sentiment, the rhetoric, the political uncertainty, instability that really is going to have an impact. We're starting to see some of that now, and we'll talk about that. But, yeah, there's probably more that is probably more having an impact right now than than the actual economic numbers.
 
Yeah. Like, and a lot of the turmoil originates from the US. So obviously, that's where we're looking first because there will be a downstream impact that will happen in the rest of the world. Yep. But we're mid mid month and these statistics only come out once a month and it's quite lagging and things move so fast. So we're looking at internally at at at, like, leading indicators and we'll get to the MEWS data towards the end. But are you seeing any impact of the turmoil that's coming out of the US also already impacted here in Europe in, like, the bigger economies?
 
Beyond stock markets, obviously, again, it's the uncertainty. But it's more to do probably with corporations pulling back investments and probably also, investment in travel, of course. So that is probably the the biggest impact right now. In terms of the economies, we have been struggling with, job markets and and especially in our industry, for quite a bit, especially in Europe. But job markets are holding up okay.
 
Economies, GDP, actually in the UK, for example, grew slightly in in in February. Things are looking okay. Germany's economy isn't the greatest, but there's a lot of investment going into infrastructure, etcetera.
 
Again, it's it's very similar to the US, of course, a very different approach to things, and and we're looking almost from the outside into what's happening to Europe, to to to the US. But at the same time, the economy is doing okay. It's it's not not great, but that wasn't the expectation either. So in that sense, it hasn't changed too much, but it will have likely have an impact on travel moving forward. And that's mostly, again, due to uncertainty of what's happening with tariffs and all these kind of things.
 
Yeah. Like, so initial signs seem relatively stable, but we're definitely seeing some small impacts already. And it's more how long will it take to see an acceleration of this, or will it stabilize? And that's the the thing we internally are already questioning because it is really hard to plan with the speed at which things are moving.
 
And, you know, travel is being booked far, far in advance often. So the impact might come several months down the line. So if we go from that economical view into kind of what are the travel data sources showing? Like, what are your favourite sources of data that you always go to?
 
Well, there's I guess there's a few. There's obviously when you look at the sentiment point of view, there's survey data. So, there's there's a lot of, very good consultancy companies and and companies like Skift that that report on all of these things, of course. And they provide an an insight into how are people thinking, what are what are future travel plans, etcetera. So that's one view that that I think is relevant and interesting, but needs to be taken with a grain of salt as well, of course, because things change very quickly. So people's plans change very quickly as well.
 
When it comes to actual data, you do rely on on national boards, national tourism boards, governments to report on these things, and there's a massive lag on that. So these kind of indicators that that we have tend to be very trailing. We would like to look at leading indicators. So that's why and we'll talk about more sort of what we see in our data.
 
We like to rely more on sort of on the books data. So what's already on the books for hotels when we look into the future? Is that looking, weaker or stronger than it was last year? Those are the kind of indicators that that are really interesting to look at.
 
Because if you look at if I stay with the hotel industry as an example, if you look at, for example, RevPAR or ADR, these are indicators that, people are booking or have booked a a stay for a specific price, but that booking might have been a long time ago or might have been today. It doesn't give as much of an indication as when you look because you don't know when those bookings massive impact in terms of cancellations because people just had to stop travelling. With this kind of uncertainty, a lot of people will still continue to travel unless they have a very strong sentiment against, for example, traveling to the US.
 
They probably will continue to travel even if the economy starts to be a little weaker. So we have to wait and see a little bit on on these things.
 
Yeah. Like, I think it's because it's people are always comparing it. It's always like COVID. I'm like, it's nothing like COVID.
 
COVID was so extreme in the way that governments shut borders and hotels were told to close the doors of their hotels. So the cancellations just skyrocketed versus newly created bookings. And we actively looked at at that metric. And then we started looking, k.
 
How do the domestic like, do we see domestic travel shifting? And there was a massive shift from international to domestic because you can only travel within your own country. That is not the case here. This is a much slower moving beast that might take a lot longer to recover.

Chapter
Comparing current trends to past events
 
But it's almost like when you look at some of the economic views, people are saying, yes. It's slowing down, but it's the growth that's slowing down. We're still growing as an economy. So it it's really important that we keep the narrative.
 
Like, obviously, yes, this will have an impact, but it will be nothing like the drama of COVID, when that first happened to us.
 
No. And I I would I would always compare it, not to COVID like you say. I compare it to previous, slowdowns in in in economic growth or recessions.
 
And I think one thing that we do need to notice that GDP growth and tourism or travel spending growth are very interlinked. There there there's a strong correlation between the two. So we do see some impacts. If there's an extended time of recession, you do see an impact in travel spending.
 
But often it's not necessary that people stop travelling. It's just that they change their travel behaviour. They might travel a shorter period of time. They might stay closer to home.
 
They might change their transportation mode. Whatever it is, it's it's it's not going to be like COVID where it completely dries up. It's just travel patterns change, and you need to be able to respond to that as a hotel.
 
And I think that's where, the nimbleness of Atelier is those that can quickly respond because they have a modern tech stack can adjust to different travel trends because suddenly if you get more local travelers, that's a different market that needs a different messaging. That's why it is important that people do keep an eye on what's happening, where the traveler's coming from. And and this leads into the next question, which is where are the travelers going to come from? Because the US has obviously seen I I saw this interview with the CEO of Accor where he said we are seeing a dramatic impact of travelers going into the US. And then Feet published these great charts where they showed that we are seeing some impact from Europeans going into the US. Right?
 
Yeah. Yeah. Yeah. The the the NTTO, which is the the National Tourism Association in in, the US, is a government organization.
 
They publish monthly data on sort of inbound travel, so so travelers from outside of the US coming into into the US. And for March, the Europe numbers were down by, I believe it was seventeen percent or so. So there's definitely an impact that they're seeing from Europeans traveling to the US. Now it's always hard because there's, obviously, there's so many things happening.
 
So we have to take it again. You do need to consider that, for example, last year, Easter was in March. This year, it's in April. That's a that's a big travel occasion.
 
There was quite a lot of bad weather in the US. There were wildfires and all these kind of things that might have stopped some people from traveling. So those need to be taken into consideration as well. That doesn't probably mean that there's a seventeen percent decline in travel, though.
 
So the the sentiment, the the rhetoric that's happening right now in the US probably has had some impact on travel bookings, and we're seeing it in our own data as well.
 
And you see it from Canada as well?
 
Yes. Probably more so from Canada. Like I said, my wife's from Canada, so I've got personal experience. And I know that in Canada, obviously, the whole rhetoric around annexation, the fifty second state or whatever, was being mentioned, has really meant that there's a there's a lot of boycotting of US goods and also travel has reduced a lot.
 
There's obviously a lot of cross border by car travel, road transportation, and that has declined by over twenty percent. And we're seeing in our numbers as well that bookings of hotels have decreased as well. Of course, the impact won't be felt by everyone in the US the same, especially the states that are are bordering Canada will feel that impact. If you have a hotel there, I'm sure you rely more on Canadian travelers, and so you'll feel a much bigger impact than when you're in Florida or somewhere else.

Chapter
Future projections for hotel occupancy
 
Yeah. And it and it takes a while to catch up. Right? So right now, this is just a couple of weeks when you start to see this dip in inbound travel into the US.
 
And hotels, most of the people that are still there now have already booked up foreign advance, so the downstream impact is going to be much bigger. And what you'll see is that maybe the occupancies of hotels because people will still wanna travel, but they might travel domestically, but there's less demand. And then that will put pressure on hotel prices, which will come down because they need to fill those rooms with domestic travel. And that's where the impact is going to be felt.
 
But you'll probably see this in a few months if this continues in this way. But it might also stabilize. Right? So we see, obviously, some decisions that are driving stability in the recent few days.
 
And we're hoping that that will continue so that we can start to see that travel because we need this cross cross border travel because it really supports the industry.
 
Yeah. For sure. And, I mean, two things on that. I think, first of all, the US obviously has one of the strongest travel markets.
 
So during COVID, we saw this as well. The US actually rebounded pretty quickly because it has such a strong market. And, domestically, people might start to travel more domestically, which also the dollar will have a massive impact on that. So at the moment, the dollar is quite weak when you compare it to, for example, the euro or the or the British pound.
 
And so people might decide, actually, I'm staying in the US. And so domestic demand might might increase because of that. But, again, there's so many fluctuations there as well on a day to day basis that changes. So we can't really say right now what's gonna come down the line two, three months, in advance.
 
So I think that's for sure something that we'll, we'll keep an eye on as well.

Chapter
Corporate travel trends
 
Anything that you're hearing from the global hotel chains that are very dependent on that US market?
 
They are, I I mean, they're all public companies, so we have to take that into consideration. They obviously have have stakeholders that they need to keep happy as well. So they they're obviously never going to talk about doom and gloom. I think they're cautiously optimistic.
 
The thing that will impact them the most probably is corporate travel going down. They're obviously relying heavily on, corporate travel. And if that will take a hit because of the uncertainty in the economy and and corporations pulling back some of their travel spending, that will likely have an impact on them for sure. But up to now, they've been pretty optimistic. And for some hotels, it's also an opportunistic time where there might be some distressed assets. There might be some independent hotels that or any hotel, really, that isn't that is struggling and is looking for, a brand or a flag to attach to and get some potential marketing benefits or loyalty benefits out of that. Yeah.
 
Corporate travel is really important for our midweek occupancy in hotels. And obviously, once they get to the hotel, that's already lagging. So you need to look at the leading indicator, which is the TMCs, like, the big travel management companies. Are they saying anything at this point?
 
So they are there there was there was some research being done, and they're saying that, actually, they are seeing declines. They they were seeing up to now. Actually, twenty twenty five was a very strong year for corporate travel, and and things were looking very good. But in April, they're starting some weakness.
 
But, again, we don't know if that's gonna continue. So first quarter, very strong, actually, corporate travel. Go moving into April now, they're they're starting to see some weakness. And this is companies like Travelprognavan that that are reporting this.
 
Yeah. And the challenge is always Easter. Like, why do they keep moving Easter? Because it's so hard to predict what it does to a season.
 
And and it's obviously we're right in that period of, right, you just had Easter here last year, now it hits a few weeks later. Yep. It does really kick off a summer travel season much earlier or later normally, and we're seeing some of that trend overlapping with all the turmoil that we're seeing in the markets.
 
Yep. Correct.
 
So if we look at just ÐßÐßÊÓƵ datasets, we've been in these markets for a number of years. What are the the first signs that you're already seeing?
 
So I I wanna caveat this by saying, globally, we're actually seeing increased bookings. And so when we look at hotels that have been with us for a few years so that we're we're growing as a company, we don't wanna, dilute the data by saying we're seeing more bookings because, obviously, we'll see more bookings if we if we, add more hotels to our to our customer base. If we're just looking at hotels that have been with us for an extended period of time, globally, we are seeing an increase in bookings. So things are looking good. Cancellations aren't seeing any major differences year over year. So things are pretty stable and and actually are looking up.

Chapter
Decline in inbound travel
 
When you start looking specifically at some of the things we've just been talking about, so Europeans traveling to the US, Canadians traveling to the US, Mexicans traveling to the US. In all of those three situations, we're seeing declining bookings and slightly more cancellations. So our data is is sort of corroborating what other, companies and and what governments are saying as well. There is a weakening in in sort of inbound travel into the US according to our data as well.
 
Yeah. So and, you know, when the announcement came of the tariffs the worldwide tariffs, and then two days later that was rebounded, we immediately started looking at cancellation data because, obviously, that is where you're gonna see the impact. And you saw it spike, but nothing like COVID. But we saw a little spike.
 
And then the moment the tariffs were lifted, you saw it come down again. So I think it just really signals that we need stability. We can't deal with these very quick changes that are happening. But overall, the response was it was good to see that travel very quickly stabilized again to relatively normal patterns.
 
Yeah. And I think it's it's you're totally right there. It it's about stability, and and it's it's not even about one specific policy either. There there's so many things happening right now in the US and in in in the in politics in the US that that all sort of chip away at that that stability.
 
There's there's, there's obviously talk about some some red, orange, yellow lists of countries that might be by band. It's not gonna have a massive impact. These are these tend to be countries that don't have a a massive inbound travel into the US, but it will obviously add to the rhetoric. There's obviously a lot of deportations.
 
It's harder to get into the US potentially. Our industry relies heavily, especially in the US, on immigrants in terms of a workforce. So, again, that might have an impact on costs and and and on spending. Tariffs will have an impact on on the on the price of goods.
 
That will have an impact on construction.
 
There's it's all little things that all add up to this this massive uncertainty that we're seeing right now. And we can't pinpoint one thing that will have the impact on travel. Yeah. It's just a combination of all of it that's, that's really will potentially have an impact. But, hopefully, as you say, because things change so quickly, hopefully, it will stabilize and and things will go back to normal.

Chapter
Politics and travel
 
And earlier on, we talked about the Feet data where it showed the inbound travelers, from Europe into the US declining. Are we seeing that same data in our in our systems as well? Because we do business in both of those markets. So we must see some of that data.
 
Yeah. So Europeans Europeans traveling to to the US is declining.
 
Europeans traveling within Europe and, actually, bookings overall in the US are are actually pretty strong. So it's probably some displacement happening where people decide, I'm not sure I wanna travel to the US right now. Let me instead book something in Europe. And probably more North Americans saying, actually, I'm staying domestically or US residents staying domestically, within the US. So overall, bookings aren't as impacted yet. But, yes, like, when we when we look at, specifically, Europeans traveling to the US, we are seeing some decline, for sure.
 
And I think that's a sentiment that will probably persist knowing how the US governments right now thinks about focusing on the US, and that that means that the rest of the world is focusing on supporting themselves. And we're seeing this in Europe where Europeans are banding together more than ever before. So we become more reliant on not necessarily domestic travel from the country to the country, but from Europe into Europe. So if you are highly dependent on US travel, for example, you may need to diversify into other European countries and making sure that your website gets translated, that you properly target towards those those countries in our shift, but it might have quite some impact if you're now much more reliant on European travel into your hotel or if you're a US hotel that relies on less people flying in.

Chapter
Shifts in traveler behavior
 
And if you think about travelers coming into the US, they're normally multi multi day stays. And suddenly, when you focus on domestic, your stay pattern might shorten. So you need to get more bookings in, and you need to really make sure that you fill those gaps with a very different type of pattern that requires a different digital strategy to target them. So whilst it might seem like a small thing, it actually is a significant shift for your digital strategy to be able to target these customers correctly in the correct language and with the right activities.
 
What we saw in COVID was when suddenly domestic travel started picking up, you needed parking spaces because people came by cars. You needed to have parking services. And that wasn't a thing when people were just flying in because you needed transport services from the airport. And it's those little things that make the difference because that's what people will start looking for.
 
What are the right hotels for me for the kind of holiday that I'm looking for? And it's really I think that's the thought process that a lot of hotels will need to go through in the coming months and years probably to come because it doesn't feel we're just at the start of of this journey with the current US administration, and we're still three and a half years of that to come. So I think this is a longer term strategy that hotels will need to shift to.
 
Yeah. For sure. And and I think just to add to that, payments as well is a big one there. Different countries pay differently and and book differently. So knowing that difference and and making sure that you're ready for that is is a big one.
 
If we look forward, so so what are we seeing on the books? Because that's also often a a great indicator of Yeah. Success down the street.
 
So in if if if we don't have hotel aficionados on here, what we mean by on the books is sort of all the all the reservations that are already made for future dates. And when we look at that from an occupancy point of view, from an ADR point of view, from a RevPAR point of view, we're good. We're actually trailing or or tracking pretty much twenty twenty four data in in some cases, actually above twenty twenty four. So we're not seeing sort of future dates. We're we're not seeing any weakness just yet. And, actually, the first couple of months were actually really good, And and bookings came in faster than than they would would, in the past years.
 
Like, one of the big things that this data tells me is that you've got a a decent base of business on the books. However, the the macro patterns are changing, and that means booking patterns will change. So if in a normal year, you'd have a good base, that means you keep your price really high because you have less rooms to sell. But if the demand comes down, this is a problem because that higher price won't fill those last rooms, and you might end up with empty rooms.
 
And this is where, you know, the majority of hotels today don't have revenue management systems. And and, you know, we've been talking in recent months about why why why do people not trust this? Because it it instantly can reflect changes in the market back into your pricing strategy because, ultimately, you want the the best balance RevPAR revenue per available room, which is the blend of how how many rooms you've sold versus the price that you sold them for. And empty rooms, once the room is not sold for a night, that's lost revenue.
 
So I do strongly recommend for hotels that are thinking, what do I what am I doing? The first and most important thing is to go into the ÐßÐßÊÓƵ marketplace and look at the integrated revenue management systems that we have because the majority of hotels today, more than fifty percent, do not have a revenue management system. That means you're not ready for this thing that's about to change, and it moves quite fast. So these demand changes are difficult to predict, especially with the current climate.
 
So that's why, automated systems are really important. Are you seeing differences in European markets in in terms of RevPAR on the books?
 
I think in terms of on the books, the Benelux is is tracking like they were last year. If we look at, DACH region, it's actually performing better. So, hopefully, their economies is improving and and things are are looking up.
 
France is also looking very positive. Obviously, they have the Olympics.
 
Last year was the Olympics there. So every time Olympics hits a country, they overestimate what travel's gonna do. They raise the rates too much that occupancy drops, and they had a really bad hotel year last year. So year on year, it's predictable that it should be better. Yeah.
 
Yeah. Yeah.
 
They obviously had a they did eventually have a have a spike, when the Olympics happened, but, yes, it did two weeks, three weeks, and then it dropped right back off again.
 
Yeah.
 
You're totally right. People expected to to change everything, and it didn't, obviously. And it probably stopped a lot of people from booking. And and North Northern Europe or, Scandinavia is also performing, quite well.
 
We saw some weakness early on, but now it's actually tracking quite quite a lot above what it used to be. So overall and you sorry. I forgot UK. The UK is also, again, tracking pretty much what it was last year.
 
So we're not seeing massive changes right there at the moment.
 
Good. So if I had to summarize all of the data points that you shared with us today is that, you know, there are nervousness. We're seeing some impacts across the continents, shifting of travel being more domestically. However, what we see on the books is pretty strong.
 
The travel trends are seeing some impact about international travel, but, actually, overall occupancy in RevPAR seems to be holding strong. But it is really important that we keep this conversation moving, and we we probably repeat this in a couple of weeks' time to see what what has shifted because it does move fast. What does this mean for hotels? Something will shift inevitably, and hotels need to be ready for that shift.
 
And if you have a modern tech stack, you can very quickly adopt. So I would definitely recommend looking at revenue management systems. There's some really great partners that we have in our marketplace, Also diversifying the revenue. So there's a lot of price pressure on the core piece of revenue, which is your room rates.
 
But if you can diversify for other services and making sure that the guests that are with you are not going to eat at the restaurant next door, but they stay with you so that you have, you know, an integrated chatbot that says make your reservations at your restaurants or upsell those rooms in the best way possible. Hotels generally underutilized some of the tools that we've built, and it's a pity because that's where whilst you might see a drop off the the RevPAR, the revenue the room revenue per room, you could make that up in other services. And I think that's really the the conversation that we're trying to kick start saying, just ready yourself for a different shift in in travelers.

Chapter
Preparing for future
 
They might be more domestic, so how are you adopting to them? And as travelers come in, that you diversify your revenue streams from these customers, and then you're ready for what's to come. By no means will this be as bad as COVID. COVID was just a once in a lifetime thing where it was so different from what's happening today.
 
But we will see a slowdown of growth, if not some shrinkage of the the markets. And I think that's the thing we're just keeping a very close eye on. But definitely reach out to the ÐßÐßÊÓƵ team to help support you if you don't know how you can best utilize the tech stack to help diversify your revenue. We'll be very happy to help you.
 
Wouter, thank you for these insights. I'll probably have you back on in a couple of weeks to to give an update on this.
 
We'll we'll keep analyzing what's happening and and make sure that we can, help our customers and everyone in the industry as much as possible. So yeah. Of course.
 
Nice. Thank you. Great. Thank you.