Rajesh Vohra

As we approach 2023, Hoteliers surveyed for our October 2022 edition of The Hotelier PULSE Report show increased optimism for business performance over the coming year. Our market data also shows that group bookings are making a strong comeback, and despite rising costs and looming inflation concerns, the industry expects ADR to continue increasing over the next 12 months.

We sat down with Rajesh Vohra, Owner of the Sarova Hotels group in London, to get his perspectives on why hoteliers expect ADR to hold and the impact of MICE business on hotels that have historically catered to the business travel segment.

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We’re seeing increased consumer confidence reflected in the rates booked. Over this period in 2021, non-refundable bookings represented just 10 to 15%, when compared to fully-flexible bookings. In 2022, it increased to 50%.

Hoteliers show increased optimism around business performance over the next 12 months. Why do you think that is?

Following the uncertainty of 2020 to 2021, travelers are no longer as concerned about health and safety precautions. We’ve also passed the worst of the travel disruptions over the summer of 2022. Thus, consumers are more confident about traveling.

We’re seeing increased consumer confidence reflected in the rates booked. Over this period in 2021, non-refundable bookings represented just 10 to 15%, when compared to fully-flexible bookings. In 2022, it increased to 50%. Taking all this into consideration, it’s unsurprising that hotels feel more confident about business performance in the coming year.

We’ve seen ADR reach record-breaking levels in 2022. Do you expect this to hold or increase?

As prices increase and we are faced with impending inflation, the marginal cost of sale has become significantly more important. Prior to the economic downturn, Hoteliers worried about reaching a baseline revenue to cover fixed costs and then considered all rooms revenue above that baseline to be mostly profit

In today’s world, that is no longer possible. More than ever, Hoteliers are concerned about reducing costs - for example, through leaving parts of their properties empty for extended periods of time or reducing utilities expenses through giving guests the choice to opt out of turndown service to promote sustainability. The marginal cost of selling a room is now a material amount and thus the view now seems to be that if a hotel cannot profitably sell inventory against rising costs, then there is no point in selling it at all.

Another factor that plays into this is hotel staff, who now have to work harder than ever before to meet increased demand. We would rather look after their wellbeing and not risk overworking them unprofitably. It’s also a challenge to hire in today’s talent-short market, and those who do want employment in hospitality tend to demand higher salaries, which feeds into increasing overall costs. Thus, I do believe that ADR will hold, not because of the market demand but due to cost-based pricing strategies.

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About Rajesh Vohra
Sarova HotelsRajesh has been in the hotel industry for over 30 years. He is an owner-operator of a 4-star hotel group based in the South-East. Sarova Hotels has 4 properties and an overall estate of 600 bedrooms and 2 health clubs, with its head office based at The Rembrandt Hotel in Knightsbridge. Day-to-day he heads up the commercial departments of the company. Rajesh has been active in many industry organizations over the years. In BEAM (formally HBAA) he held several roles culminating in being the chair for the Hotels and Venues side of the association. He has had 8 years on the Board and is a Past President of HEDNA (Hotel Electronic Distribution Network Association). He was also a member of the SCA Hotel and Travel Special Interest Group working with the UK Finance PMO on the Hospitality SCA implementation plan and was part of HFTP’s GDPR/DPO Task Force.

We’ve seen group bookings make a significant comeback in 2022. Is this the same for your Hotels?

Group bookings and MICE business have come roaring back for our hotels in 2022, and quite frankly, it’s been a godsend - particularly for properties that have historically relied predominantly on the business travel segment. This is especially during peak dates, where we simply offer the price and it’s easily accepted.

Following two years of disrupted commercial activity, in our business analysis, we benchmark 2022 against the average for years 2017 /18 /19. That is our only metric to try and get a sense of what is good business and what isn’t. Looking at Q3 of 2022, ADR is up 17%, occupancy is down 10.5%, and room hire is up 15% vs the three years preceding the pandemic.

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Sustainability has now become a marketing issue for hotels rather than a general business issue. We have pushback from all of our corporate clients and even our banks asking about our sustainability strategy.

In terms of direct, I think it’s fantastic that hotels are now in a better position to challenge the OTAs, with whom we have historically shared a love-hate relationship. What hotels can focus on is providing rich content, direct booking incentives, and a clearer picture of what our businesses have to offer guests. 

Direct bookings have become a top priority for hotels, but we are also seeing increased focus on sustainability. What best practices would you recommend for hotels to leverage these trends?

Sustainability has now become a marketing issue for hotels rather than a general business issue. We have pushback from all of our corporate clients and even our banks asking about our sustainability strategy. This was not the case five years ago. Our hotels have responded with the implementation of sustainability measures, such as introducing re-usable wooden keys and door signs, as well as giving customers the option to opt out of housekeeping, etc. We have many initiatives, some of which are more successful than others. It’s a learning process for us all.

In terms of direct, I think it’s fantastic that hotels are now in a better position to challenge the OTAs, with whom we have historically shared a love-hate relationship. However, we must be realistic, because OTAs are very strong in terms of localization, visibility, and marketing prowess. What hotels can focus on is providing rich content, direct booking incentives, and a clearer picture of what our businesses have to offer guests, such as F&B offers etc. The goal should always be to improve the overall customer experience through whichever channel they choose.

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