Channel Management is Fundamental to Hoteliers

Hoteliers, now more than ever, need to concentrate on revenue and distribution management. The industry not only faces corporate budget tightening, but flight costs have increased and the decreasing value of world currencies plus job uncertainty has affected tourists’ spending budgets.

Last year, more travelers continued to book their travel using web booking engines. The success of Online Travel Agents (OTA) and the expansion of the online/offline press referring people to internet led technologies have enticed consumers to the cyber travel market.

Hence, it is the priority of any hotelier during this time to ensure yields and occupancy remain high, making the most of the sales channels available to maximize revenue over the coming years. With reports that RevPAR is dropping, hotels need to think intelligently and maximize on the tools they have to ensure the business remains strong.

Today, consumers are influencing room rates more than any time in history. The internet – with multiple price comparison websites and booking channels – provides a choice. The savvier consumers get; the more likely rates will continue to fall. However, if hoteliers take control of their presence and rates online, revenue managers can make more accurate forecasts to identify occupancy and rate levels to ensure sales are on target. In 2016 hotels were managing an average of TEN third party websites to distribute rates and inventory, five years on and the average is 25.

The challenge for many hoteliers in managing these channels is to ensure accurate rates and inventory allocation to optimize each channel to increase sales and maximize revenue. There is no point selling across the internet for the sake of being online; it must be approached intelligently to avoid the mismanagement of rates. To make the most of the internet and online distribution channel revenue managers should look at technology to save time and make money.

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By utilizing cloud-based tools to manage the distribution of rates online, revenue managers can ensure rates are accurate across all third-party websites, allocate rooms to the channels providing either a greater return or greatest number of bookings, and forecast future rates and occupancy levels. mycloud HOSPITALITY technology has been developed to ensure time spent managing online rates is reduced to improve productivity and reduce human error. mycloud Property management system, (hotel PMS Software) can give you a snapshot of all online sales activity in a single screen, manage rates and rooms on third-party websites then make all the relevant changes you need to increase yields.

At this time, hoteliers need to turn to technology such as hotel software to help them through this down-turn to remain competitive. Solutions and systems to support the revenue manager are constantly being developed that will reduce time spent distributing rooms so more time can be allocated to managing the hotel.

Without a doubt the travel industry will pick-up much quicker than it had in the past, with the rise of Eastern economies and larger worldwide travel markets, knowledge of price and availability will be fundamental to hoteliers. Further with the internet becoming a leading factor in booking travel, it is essential that it is the key platform to sell rooms. However, at the same time, the internet is a world of its own, which is broken into its own segments and markets so it is essential hoteliers know who its customers are and how to reach them – being on any third-party website isn’t going to provide the expected return.

As we have seen throughout the media and even in our own industry – belts have tightened and the economy is not as strong as it was – but we know that we have recovered before and should prepare for when it does. In the meantime, it is essential to focus on making the most of what you have by optimizing sales by using the internet to benchmark and allocate rooms efficiently to achieve greater occupancy and therefore increased yields.

 

The Conflict: Online Travel Agencies versus Hotels

For many years, travelers have gone onto online websites like Priceline, Expedia and booking.com to find and reserve hotel rooms or flights. However, over the last year a direct booking war between the Online Travel Agencies (OTAs) and hotels has only become more intense, as they both battle one another for direct access to travelers. As hotels did not have the right technology and commissions were reasonable, it was completely normal initially. Fees paid to OTAs are now higher than ever, at nearly 25 – 30 percent in some cases, and contracts have become horrendous. Nevertheless, a definite is that hotels have clearly stepped up their game in the last year to steer bookings through their own website. Read on to know more.

The bond between OTAs and hotels / hotel chains has been under growing pressure for some time. While OTAs have simple and user-friendly websites offering a range of hotel options for the traveler, they are not quite able to build brand loyalty. For price conscious tourists, they would go for that hotel option that satisfies basic needs: a place to sleep, wireless internet connectivity (increasingly) and perhaps, breakfast. What about the other traveler segment, the one who actively seeks out the hotel brand they long to stay in, every annual holiday?

A research by Morgan Stanley projected that the global hotel business saw revenues of $570 billion in 2015, and of that amount, OTAs collected roughly $16 billion in commissions. With the online titans merging and possibly narrowing their hold on travel bookings, globally popular hotel chains are now offering unprecedented benefits to attract travelers to book directly on their platform: check-in before even arriving at the hotel, Wi-Fi, free meals and even the ability to choose a particular room – one of the many standout perks Hilton offers its direct-booking guests.

There’s a lot at stake. Eliminating the intermediary not only saves on commissions, but also means that hotels can be in direct contact with their guests. This means hotels could then build guest profiles of certain desires and spending patterns, to assist in attracting them in the future. Moreover, hotels introduced loyalty programs to get guests to book directly with them, with reward points and exclusive benefits like lounge access, room upgrades, etc. Hilton’s multi-million-dollar ad campaign ‘Stop Clicking Around’ proved to be a success, as they promoted a 10% concession and free Wi-Fi for loyalty members who booked direct. By doing so, loyalty program members also earn reward points and many of them do not wish to give them up, so it could be a great lure.

Nonetheless, the OTAs took a step ahead and responded, and Expedia in particular did a great job at it. First of a kind, the travel company promoted a hotel’s discounted loyalty rates next to standard rates. Provided guests enter their credentials they get to avail this special rate, and instant enrollment into the scheme was possible as well for guests wishing to join – allowing them to book on the channel, and not necessarily on the hotel’s website.

On the contrary, competing with OTAs on price itself is not too simple. A traveler’s assumption could be incorrect sometimes, that hotels could offer better rates if booked direct. In reality, rate parity clauses exist in contracts with OTAs, disenabling them to challenge the OTA – even though OTAs constantly battle out each other, killing the transparency in rates. It’s more than just the room price at the end of it all, it’s about what more could be offered by the hotel as additional perks.

In conclusion, the book direct war is not anywhere close to an end as OTAs and hotels are in a constant clash for travelers’ bookings. Hotels encourage guests to book direct by using a variety of incentives like loyalty based extras and upgrades. OTAs as well have stepped up by eradicating rate transparency. As mentioned by Morgan Stanley research in the simplest form, should OTAs win the war, they will be able to gain a larger share of bookings and drive up the distribution costs for hotels. Should hotels be victorious, the efforts taken to increase direct bookings would simply boost hotel brands, at the expense of OTAs. A long term price war without increased focus on experience or additional benefits, would see a drop in daily hotel rates and would eventually mean the traveler wins, as they continuously hunt for the best deals.

Millennial Kids Changing Global Travel

A growing segment of the global travel industry is the youth fragment. According to a report by The World Tourism Organization (UNWTO) and World Youth Student & Education Travel Confederation (WYSE), they generated US$ 165 billion in 2010, with the figure expected to double in the forthcoming decade. This emerging division of the worldwide travel industry has made travel specialists ponder on a rather different business model, shifting the focus on experience as well as ensuring that the millennial kids are connected throughout their stay.

The influence of globalization and technology has led to youth valuing experiences and the feeling of ‘being connected’ over traditional hotel frills. Thanks to the free internet program, Facebook for example, is now available to smartphone users in selected countries. The young travel community wants to experience the place they reside at and hence, wants a place with a local touch. Hotels that can help them connect with local, traditional and authentic places as well, fulfills their desires after all. From the looks of it, quite many hotels have hardly changed the way they operate over the last decade, still consisting of the same in-room conveniences, check-in process and high-rise, heavy curtains. A young traveler is no longer looking for white-linen service or stewards to carry their luggage up to their room. When the modern generation of young travelers enter a hotel, they want to be connected with a steady internet connection, feel entirely at home and be in a setting where they can experience something.

With the support of the World Wide Web, an 80’s or 90’s kid now also has access to unprecedented information, easily accessible from a desktop, laptop or even a mobile device.  The internet has also multiplied the opportunities for social interaction through travel. With social media and budget-travel tools like Airbnb and Skyscanner, they found out that travel wasn’t nearly as expensive or challenging as previously thought of.  Looking at friends’ photographs of past trips on Facebook or Instagram, viewing TripAdvisor’s ‘hidden gems’, arranging to stay with locals or getting tips from numerous travel blogs, helps young travelers to bond before, during and after their trip, redefining the global travel scene.

For those hotels that have changed, regardless their size, it has been for the better. Receptions for instance, have become smaller in size, and communal and get-together areas with a mix of comfy sofas, work and meeting spaces, have been on the increase. Guests are able to sit wherever or serve themselves with what they’re craving the most, as the formal divider between lobbies and restaurants are now nearly non-existent. Rooms are now smaller as many young travelers spend majority of their time in social places.

In conclusion, these young travelers are looking for a home-away-from-home. They thrive in environments where they can be part of an experience by networking with the people that live there as well as staff. Satisfaction can be derived when they drink coffee surrounded by other people in a reception, rather having a coffee machine in their room – hence being involved. Internet and social media platforms have aided these young lads in changing the traveling scene around the world.

So for those hotels still operating as they were a decade or two ago, they need to adopt more and more technology if they want this business, the technology must help them get exposure across the globe. Hotels must also be sensitive to online social discussions and comments to ensure their brand is not losing out. Technology today helps hoteliers and the cloud is a boon to such properties who aspire to have similar solutions like five-stars, but do not want to bear that much capital expenditure.  Do consider cloud-based hotel pms solutions and see what fits your needs and helps you grow.