LONDON—The Internet might help hotels from all segments level the playing field in the battle for market share, but it might not be the end-all, be-all some industry observers have claimed.
Three revenue-management specialists participating in a late February discussion at the London offices of STR Global, a sister company to HotelNewsNow.com, agreed that simply being active in the digital world isn’t as fruitful as it was even five years ago.
“When the Internet first started to really develop as a booking channel, there was definitely this thought that this has now become a level playing field, but I think now because of the money spent on marketing from some of these large (online-travel agencies) that the independents can very easily fall behind,” said Janel Hoskins, director of revenue for the 331-room St. Ermin’s Hotel and formerly a revenue-management consultant with Revenue by Design. “Also, you have to remember that not all of our customers book through online. You know they don’t all book on an OTA.”
“There’s still a challenge though, isn’t it, because if you think about the Internet, unless you know the hotel name, if you’re just typing ‘hotel in London,’ you’ve got the likes of the OTAs again buying up the search terms. So if you’re an independent property you’re again paying for pay per click, and that’s again expensive,” said Neetu Ganesh, cluster revenue manager, Redefine Hotel Management. “You’re sort of in a vicious circle.”
Christian Boerger, Mandarin Oriental Hotel Group's regional director of revenue management, Europe, Middle East and Africa
Christian Boerger, Mandarin Oriental Hotel Group’s regional director of revenue management, Europe, Middle East and Africa, said the quest to own keywords and search terms is often a difficult one.
“Even we, as a larger company, have an issue with OTAs bidding on our brands and keywords,” he said. “And it’s not something you can easily change—you don’t have any legal right to it unless Google changes their terms and conditions.”
Hoskins said the situation is further exacerbated when wholesalers—beyond the OTAs—enter the picture.
“There are still feeder markets out there where people don’t want to book online. They still want the security of the travel agent, then you have to be playing in all fields,” she said. “And then as an independent, you need those wholesalers and the tour operators that are working in those markets and distributing to those markets.”
Look outside the box
Boerger said the “we’ve-always-done-it-this-way” syndrome that prevails at many hotels when it comes to a distribution strategy is flawed and will eventually cause problems because of the ever-increasing layers involved.
“It’s almost like a spiderweb of who sells to whom, and every step you have in between,” he said. “Let’s say I give a rate out to provider X, it gets reduced and discounted some more and some more, and you have your own rate you sell on your branded website, and then you see I’m on metasearch engines such as Trivago or Kayak. It can get scary, and you have like discrepancies of up to 70, 75% sometimes.
A hotelier needs to look outside the box and not do what’s always been done, Boerger said, because it’s not adequate anymore. “That’s one of the biggest challenges that comes with that whole distribution puzzle,” he said.
Hoskins said a hotel’s leaders need to carefully examine each contract as it is comes up for renewal, rather than have a rubber-stamp approach to contracts that might not be in the property’s best interests.
“You have a combination of static rates, of precontracted promotions that were diluted further, and then the problem is we don’t even know where the rate gets distributed to, and we don’t have any legal rights to tell them what they have to do,” Boerger said. “We really have to try to narrow this down and try
to go back to those companies, and really clearly tell them what is the expectation for a proper business relationship so it works for both sides.”
Booking strategies for the future
“For us, having to go on those metasearch engines and then not even knowing who sells to that website like travelrepublic.com … we physically have to—and it’s getting down to that—we have to make test bookings,” he added. “We have a special company credit card now and one person who makes bookings to those individual properties to figure out who is actually supplying that website with inventory.”
Neetu Ganesh, cluster revenue manager, Redefine Hotel Management
Ganesh said the layers of distribution require hotel management to carefully track the intermediaries so the property can effectively manage rate.
The three experts said it’s not as simple as completely cutting out the wholesale because wholesalers do provide an important link to booking some rooms.
“For me being in a city center property, I’m probably in a much stronger position to say, ‘OK, we’re not going to deal with a wholesaler,’” Hoskins said. “But if you’ve got a hotel that’s in a destination where they’ve tied in with flights and the location, 90% of their rooms are being sold through wholesalers, then how do they manage it?”
Ganesh concluded there are obstacles beyond some hotels’ control, including branded websites that might not be easy to navigate..
“On some of the hotel websites, you can’t even filter by location,” she said. “The technology‘s just not always there for the hotel companies to be able to provide the same solution as for example, say, a Booking.com or Expedia. That’s where the challenge is. If you’re going to make it difficult for (a consumer) to book, then they will go somewhere else because to them it doesn’t make that much of a difference where they book a room as long as they can book one.”
LONDON—Three revenue-management specialists who participated in a discussion at the offices of STR Global, a sister company to HotelNewsNow.com, described the revenue-management process at their companies and properties in the following manner:
Jeff Higley, editorial director, HotelNewsNow.com: What is the reporting process for revenue management at your hotel or company?
Christian Boerger, Mandarin Oriental Hotel Group’s regional director of revenue management, Europe, Middle East and Africa: We see a little bit of an evolution going on, something that has been done at companies like the big ones, such as (InterContinental Hotels Group) or Hilton (Worldwide), for a long time already where that position of revenue manager or director of revenue has been evaluated to be the same part of the executive or planning committee already. Now we are in that kind of transitional period moment, where in most hotels it still falls under sales and marketing. We have a few properties where that role on its own has a direct reporting line to the general manager, which I would like to see more and more properties doing in the future.
Janel Hoskins, director of revenue at the 331-room St. Ermin’s Hotel in London: I report directly to the GM. We have a different role to the sales team and I respect what they do, and I would not ever want to be a director of sales, but we tend, in revenue, to look forward more than sometimes the sales guys do. One of the key conflicts is where objectives or goals are not aligned. And that causes the problem at a lot of properties.
Neetu Ganesh, cluster revenue manager, Redefine Hotel Management: Over the years I’ve had different functions where I report into. So I’ve had the function where I report into the general manager, but that was when I was based at a unit. In a cluster role, it’s more like the director area of operations that I report into. At the moment, I report directly into the CEO and the area manager.
Higley: Is there an inherent conflict of goals when it comes to sales wanting more rooms sold and revenue management wanting more revenue on the books?
Hoskins: Yes, and that has to be placed within the cultures that everyone’s objectives are aligned, that you’re all moving toward the same ultimate goal, which has to be money and profit. It’s all about the profit.
Boerger: The money comes in one way or another. It’s about streamlining it, channeling it and optimizing it where it actually comes in.
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