Hospitality and the SRQ Marketplace

Key demographic and local trends affecting hotels, vacation rentals, restaurants and golf courses in the Suncoast and SRQ marketplace

Florida continues to experience growth across both the general population and the inflow of travelers. Enterprise Florida reported a growth in the state population of around 2.0% in recent years. VisitFlorida reports that travelers into Florida from all global destinations increased 2.5% for 1Q17 compared to the same period the previous year, reaching 31.1 million visitors.

Manatee, Sarasota, and Charlotte counties are no exception to this. ESRI’s analysis showed these counties experiencing a total population growth rate of 7.3%, 6.0%, and 5.0%, respectively, from 2010 to 2016. Further to this point, Metrostudy reports that Sarasota County experienced 23.4% growth in housing starts when comparing 1Q17 to 4Q16. Manatee county experienced a decrease of 0.2% in the same metric.

Other cities within this area also reported meaningful population growth. The Herald-Tribune recently reported that the city of Sarasota experienced 2.5% growth from 2015 to 2016 based upon Census Bureau data, while Bradenton was at 2.3% and North Port at 3.3%. Each of these areas has a different demographic makeup and understanding the local hospitality industry supply, population and demographic data at the county level shows metrics that should be of interest when planning for future marketing activities.

Local Hospitality Industry Supply Levels

County

Hotels Full Service Restaurants Limited Service Restaurants

Golf Clubs

Manatee

130

552 332

43

Sarasota

192

836 479

51

Charlotte

48

290 209

20

Source: Enterprise Florida

However, most of us understand that these numbers are changing and sometimes rapidly. Hotel room inventory in the city of Sarasota will be changing significantly during the next 12 to 18 months. It may also be worth mentioning that while these numbers are close and directional, they are not perfect due to how business types are categorized within the data.

Reviewing the population of the area allows us to compare it to inventory levels for each hospitality segment.

Local Consumer Demographics

County

Population Median Age Households Households 50k +

% Households 50k +

Manatee

346,511

47.0 144,760 70,802

48.9%

Sarasota

402,055

55.1 185,183 93,276

50.4%

Charlotte

167,940

58.0 77,379 34,679

44.8%

Source: Enterprise Florida

Ratios: Population Per Supply

County

Population/ Hotel Population/ Restaurant

Population/
Golf Club

Manatee

2,665

392

8,058

Sarasota

2,094

306

7,883

Charlotte

3,499

337

8,397

While the above table has a reasonable amount of consistency across each county, the data at the city level is much more disparate with significant variations in the ratios from city to city. These calculations lead owners to ask if they are getting a fair share of the population and its extended sphere of influence to visit a specific location. Completing this analysis properly, requires the addition of inbound fly and drive travel activity to be included. Combining these data sources creates a baseline of volume that should be achievable for a given location and promotes a better understanding of the ebbs and flows from which marketing programs may influence revenues.

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Accubase Introduces Core Services for the Hospitality Industry

Nokomis, FL – May 15, 2017 – Accubase, a marketing technology research and services company, announces the availability of its research, planning and implementation coordination services specifically designed for the hospitality industry. Accubase recently customized its offerings to meet the needs of the hotel, restaurant and golf club management segments of the industry to provide each subscriber a cost effective resource for creating the technology aspects of their marketing initiatives. The compiled research covers thousands of solutions and services to assist teams responsible for both marketing and architecting the necessary marketing technology infrastructure. Accubase’s planning services enable clients to identify marketing and technology solutions to architect a capability plan for a campaign, initiative or as an essential element of a complete marketing plan. Its implementation coordination services guide a business from marketing concept to results.

Accubase understands the roles and value provided by the corporate group, brand, region and individual location and provides services designed to complement each. Understanding the scope and breadth of marketing solutions allows Accubase to formulate Marketing Technology capability roadmaps that provide insights into what’s possible with the resources of the buyer and the innovations from today’s Solution Providers, such as software companies, technology vendors, marketing agencies and consultants.

Today’s solution providers and their products enable time-constrained marketing and IT teams to do more with less and at a faster rate. These solutions number in the thousands, creating a sea of unknowns when embarking upon a new marketing initiative. “When partnering with Accubase, companies are able to generate competitive advantage by architecting the future of their marketing capabilities and then making tactical investments as they navigate their planned roadmap,” said Tim Henthorn, CEO of Accubase. Essentially, Accubase facilitates a company’s ability to identify, design and implement either individual marketing initiatives or comprehensive marketing programs for multiple hospitality industry segments, including:

  • Hotels: Chains, Brands, Ownership Groups, Management Companies, Hotels and Vacation Rentals
  • Restaurants: Restaurant Groups, Management Companies and Restaurants
  • Golf Courses and Clubs: Golf Management Companies, Private Clubs, Semi-Private Clubs and Public Golf Courses

More specifically, Accubase strives to increase marketing capacity and positively influence both the probability and level of success of marketing plans. Accubase is positioned to allow a client, along with its marketing and technology resources, to quickly adapt to the market by regularly invigorating its business with the necessary marketing capabilities required to achieve its planned objectives.

The Balance of Power for Selling Hotel Rooms

Traditionally, Marriott is a business driven by franchise and management company contracts. It is known for its branding, service and operational expertise. Starwood in recent years is placing additional emphasis on a similar path and shedding owned hotels as part of its “asset light” strategy. The resulting combined company sells franchise and management contracts while providing numerous services that effectively provide marketing and management capabilities to its hoteliers. Therefore, these specific brands and their parent companies are less driven by the real estate markets and more driven by consumer and business demand for their branded hotels. Multiple industry participants view the recent spurt of hotel consolidation as a trend that fuels a rivalry against the major OTAs. While there are other overarching factors, this is certainly a facet to consider.

While each chain and brand has defined a specific set of tactics for distributing rooms within the OTAs, Marriott and Starwood continue to aggressively steer consumers toward their brand sites even to the extent of foregoing top search placement within the OTAs. It appears these two brands view the major OTAs as expensive alternatives and want to control terms of distribution while providing lower cost distribution solutions to their branded properties. However, from a property perspective, owners and management companies may have different interests. If they are able to generate reservations at a reasonable cost, all things considered, then they may not have as much preference as to where the booking originates. That said, distribution costs do vary across channels and sites and consolidating two major hotel players could deepen the competitive divide between these particular Brands and the OTAs.

This consolidation will also continue to affect other segments of hotel distribution, such as managed travel and group bookings. Most major hotel companies are responsible for a significant portion of a branded property’s marketing. Corporate negotiated rates play a role in this since the chain will have more control over inventory and pricing for any market where they have a significant share of inventory. It is likely that this will enable the combined company to tactically respond to RFPs and more confidently set pricing levels for their existing and potential contracts. However, this doesn’t change demand levels within a market unless they apply these tactics to shift business from certain destinations to other locations more than occurs today. CWT’s Whitepaper recently summarized markets where the combined Marriott and Starwood brands represent a significant portion of their corporate negotiated business.

Although we only covered a few reasons above, there are many areas of influence for properties to consider when it comes time for marketing and distribution. Each of these has technology underpinnings. As a result, technology that supports marketing and operational business processes will play a meaningful role as hotels continue to balance the value offered by a major marketing partner, such as a Brand or an OTA, against the ability to pursue their own marketing initiatives while minimizing any contractual limitations placed upon them. What’s important for properties to maintain is the ability to react to changing customer demands and market dynamics by quickly launching relevant marketing initiatives for any segment of business. This is crucial to achieving sustainable success and requires a pliable marketing and technology infrastructure.

Marriott and Starwood’s paid media spend was estimated at $96 and $55 million for 2014 by Kantar Media. This equates to spending $23k per property or $134 per room for Marriott and $45k per property or $155 per room for Starwood on an annual basis. Expedia and Priceline on the other hand spent approximately $2.8 billion and $2.6 billion in 2015, respectively. Most of these marketing budgets are directed at core marketing capabilities, such as branding, destination marketing and the marketing technologies required to attract and convert travelers from across the globe.

The following table shows the estimated number of solutions that are part of the marketing technology infrastructure for each of the aforementioned companies as it relates to their digital presence. These encompass software capabilities across multiple categories such as: Website Development & Management, Search & Social Marketing, Data Management, Advertising Infrastructure & Networks and Analytics solutions. However, these numbers represent only a sample of the full list of technologies each has in place to manage their digital and offline marketing presence as a whole.

Company

Solutions

Marriott 70
Starwood 88
Expedia 94
Priceline 85

* Data provided by Accubase & Datanyze.

Therefore, when a hotel purchases services from a Brand or OTA, part of the result arrives in the form of reservations. The investment made to generate those reservations is significant even when only considering the marketing spend and the underlying marketing technologies. It is also important to note the similarities and differences in how these dollars are being allocated in their efforts to reach a preferred customer audience. When combined with the marketing that happens for an individual hotel, it is evident how complex the marketing world is for a given property.

Evaluating a slightly broadened hotel marketing landscape for a moment shows the strengths of the companies in each segment as compared to a hotel’s own website. Hotels have numerous decisions to make when considering how to market their property online and deciding what resources are needed to achieve their goals. When concentrating on the Search and OTA segment, given the significant amount of overlap across them, this table shows the general value of each.

Value Search Engine Meta-
search
OTA Brand Website Agency/
Hotel Marketing

Hotel Website

Hotel/Brand Awareness
Destination & Property Search
Advertising
Benchmarking
Customer Loyalty Rewards
Shared Customer Information
Distribution to Multiple Sites
Reservations

There are many negotiating levers that may be material for any given OTA agreement, whether the agreement is with the Property, Brand or a combination thereof. It will be interesting to see how the OTAs continue to innovate their products and services to provide sales and marketing solutions to hotels and other travel service providers.

Consolidation at the hotel level, whether it occurs from deals like Marriott and Starwood, Accor or aggregations at the owner or management company level, may continue to change the allocation of leverage amongst the hotels, brands and OTAs involved. Ultimately, the parties have to find a reasonable solution based upon their knowledge of the market and control of these levers. Many levers exist, such as Pricing, Commissions and Placement within the OTA search results that will define the marketing agreements between the hotel and OTA.

In summary, the mega hotel mergers that are happening today, will continue to change the marketing and distribution landscape and the technologies intertwined within it. The combined company of Marriott and Starwood will cause changes in both the industry and its own resources. However, it will have to make many decisions regarding how the uniqueness of each brand will survive and how this will influence the next generation of marketing initiatives and supporting technologies at the chain, brand and property level.