Hotels Leverage Aviation Data to Optimize Passenger Demand Response

Although distinct in many aspects, the hotel and aviation industries are inherently interconnected. Throughout the pandemic, numerous hotels faced closures due to the absence of international flights that traditionally brought a substantial influx of tourists to prominent destinations such as Paris, New York, and Venice, Italy. As the tourism sector experiences a resurgence following the pandemic, hotels are increasingly exploring novel methodologies for forecasting demand by leveraging flight-related data. Let's find out how.

Analyzing the correlation between airline passenger data and hotel demand has emerged as a pivotal trend in the hospitality industry. According to OAG, by utilizing passenger booking information and prospective flight schedules, hospitality entities gain insights into visitor traffic and formulate precise demand forecasts based on market share, thereby optimizing pricing strategies. Furthermore, evaluating newly established routes and flight schedules empowers hotel operators to recognize prospective untapped markets, thereby facilitating revenue growth.

Hotels and resorts can pinpoint their main source markets by analyzing worldwide flight schedules, enabling them to craft marketing strategies for particular demographic groups. For instance, introducing a new non-stop route from a city presents an opportunity for hotels to design promotional efforts to appeal to travelers from that area.

Dynamic pricing is a strategy widely adopted in the airline industry. It operates on the principle that as more people search on Google for flights from Airport A to Airport B and subsequently proceed to look up flights on the airline's webpage, ultimately making reservations, the price of the tickets increases. This price adjustment can occur daily or, in some instances, even hourly. Hotels have recently revised their pricing strategies, explaining the initial high room rates before the Olympics. However, as fewer people showed interest in visiting due to perceived instability in France, the prices were reduced, serving as an example of dynamic pricing in the hotel industry.

According to Ed Bastian, Delta's CEO, Paris was projected to experience reduced popularity during the Olympics. "Unless you're going to the Olympics, people aren't going to Paris ... very few are. Business travel, you know [remains strong], [but] other types of tourism is potentially going elsewhere." This insight could have been gleaned from analyzing flight booking data or staying abreast of aviation industry developments. Such knowledge could have allowed hotels to adapt their strategies before the anticipated decrease in demand by lowering prices.

Before Ed Bastion's CNBC interview, the proactive reduction of room prices could have mitigated the decline in demand observed over several months. The preemptive reduction might have stimulated a surge in last-minute bookings, effectively prompting individuals to partake in a unique opportunity to witness the live competition in Paris. This strategic move could have resulted in savings for Delta and Air France, positively impacting their collective bottom line relative to transatlantic flights during the summer season.