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Expedia Insights Reveal Consumer Response to Declines in Airfare Hotel Room Rates

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Expedia recently released insights on consumer travel demand that indicate consumer response to value-driven offers from Asia hotels is spurring an increasing interest in regional travel.

To spur demand, airlines and hotels in the past year significantly reduced rates into and across the region. Air ticket prices have come down significantly, with ticket prices from the Americas and EMEA into APAC down 24% from last year, while fares for travel within APAC are down 25%.

 Hotels also adjusted their rates to the downturn for the first half of the year, with major destinations showing double-digit percentage reductions from 2Q08 to 2Q09. Beijing led with the biggest average room rate reduction of 36%, while Hong Kong dropped 23%, Singapore 28%, Tokyo 26%, and Mumbai 25%.

Consumers are responding, with a 16% year-on-year increase in APAC travelers who are booking promotional rates. In the first three quarters of 2008, 41% of hotel bookings on Expedia and Hotels.com sites in APAC were promotion-based. This increased to 57% of all hotel bookings for the same time period this year.

These deals enabled travelers to trade up in quality for the same budget in several markets, as illustrated in Beijing where 4-star hotels gained a 6% share of bookings while 3-star properties lost 8% over last year. In Sydney, 5-star properties gained 10 points, through the double effect of aggressive promotions and a very favorable currency situation. In addition, air capacity into APAC is coming back after its low in 1Q09, and is ahead of US and Europe in the recovery curve.

Much of this comeback is being driven from within the region itself. Expedia data shows a higher growth of intra-APAC travel versus long haul travel into the region. For hotel bookings into the APAC region, Expedia's Asia Pacific points-of-sale (POS) have gained share versus the EMEA and Americas POS, contributing as much as 30% of the region's room nights.

"60 million consumers worldwide visit our sites every month, booking more than 57 million room nights at our hotel partners' properties last year," said Cyril Ranque, VP Asia Pacific, Expedia Partner Services Group. "This gives Expedia unique insights into travel demand that enable us to help our hotel partners manage demand and occupancy in this environment. Right now, we are seeing that value is still very important to travelers, and our airline and hotel partners are taking full advantage of the dynamic and targeted capabilities of our sales and marketing channels to implement more sophisticated revenue management strategies."

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