3 ways to win the group customer online
3 ways to win the group customer online
12 NOVEMBER 2014 10:43 AM
The group customer is the next battleground in online distribution. To win this war, generate loyalty and drive brand preference, hoteliers must follow these three steps.
Hotel companies have fallen behind third parties in digital capabilities for meetings and events, but by employing a few digital strategies, they can drive more direct business and impede intermediary growth.
Group meetings and events represent a $70-billion market in the United States, and we estimate 35% to 45% of that spending is intermediated. That means group meetings and events intermediaries cost hoteliers approximately $1.4 billion to $1.8 billion in fees each year.
Traditional companies such as HelmsBriscoe or ConferenceDirect, which primarily focus on large, complex meetings, have driven group intermediation historically. However group e-channels—a new, digital form of intermediary—have emerged. Group e-channels target a new segment: smaller, simpler meetings that are more transactional in nature and historically have seen much lower levels of intermediation.
If intermediation levels on these smaller meetings reach that of larger meetings, we could see overall intermediation rates increase as much as 10%, costing hoteliers an additional $350 million to $400 million per year in commissions.
As with larger group business, converting these smaller online requests into bookings requires quality content about venues and available food and beverage. Ease of transaction and speed of response also are key to win the business.
The move in group travel is part of a larger battle for the retail customer that has been going on since the 1990s, with the emergence of hotel websites and online travel agencies. After 9/11, travel merchants grew substantially, further changing the industry by taking a 20% margin on the rooms they sold through their websites. Most recently, Internet search-based and shop-based meta-mediaries, such as Google and Kayak, have inserted themselves into the travel distribution chain.
A new battleground is emerging for hotel companies, this time for the group customer.
What can hotel companies do about it? Similar to the transient intermediary space, this is a battle for control of the customer.
Digital group intermediaries have the scale and penetration to control the top of the funnel of customer leads. But they require the cooperation of hoteliers throughout the process of selling and delivering the event.
To win this battle, generate loyalty, and drive brand preference, hoteliers must follow these three key steps:
1. Invest in group digital content so planners won’t have to visit each property. Event planners want to understand the meeting space, layout options, and food-and-beverage options without having to call the hotel or make a visit.
Group e-channels have invested in developing proprietary venue profiles about the properties they list. To protect the top of the funnel, the hotel website must remain the best place to look for information about the property when planning a meeting.
2. Enable a fast online transaction. Meeting planners expect a fast response with rates and availability for their smaller, more transactional meetings. Convenience, as much as price, is an important consideration when choosing a venue for these meetings. Hoteliers can develop differentiated capabilities by providing immediate access rates and availability to meeting planners shopping on their websites.
3. Build deeper relationships with meeting planners. Planners should be rewarded for their repeat business. Hoteliers should better leverage the data they capture about planners. This ultimately will lead to greater brand loyalty and increased share of wallet. If hoteliers don’t take ownership of this relationship, group e-channels will.
In summary, hoteliers must act now if they want to prevent further intermediation. Group e-channels are on a rapid growth trajectory, are well-funded and already have digital products substantially better than most hotel companies. Waiting to invest while e-channels continue to build a better digital product would be repeating the mistakes of the last two decades in the battle for the retail customer.
Vikram Krishnan is a partner with Oliver Wyman’s aviation practice, and he is based in Dubai, UAE, and Washington. He focuses on clients in the airline sector, with a particular emphasis on business design restructuring, revenue management, network and route strategy, loyalty program redesign, low-cost-carrier strategies, and operational excellence. Mr. Krishnan holds an MBA from the Wharton School at the University of Pennsylvania and an AB in economics from Dartmouth College.
Dan Kowalewski is an associate partner in New York focusing on the hospitality and travel-related service sectors. Prior to joining Oliver Wyman, Kowalewski was the VP of revenue management for Wyndham Hotel Group. He has worked on reservations, distribution and revenue management functions, in addition to enterprise-wide technology strategy, business process transformation and organization change. He also has a strong understanding of travel industry technology trends and has managed several post-merger integration efforts.  
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No Comments

  • Alisa November 12, 2014 10:05 AM

    With 61% of planners going to the hotels website and 81% wanting rates and availability in real time, hotels that don't offer planners these tools will lose to those that do.

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