Owners debate pros, cons of two disruptors
20 APRIL 2015 6:04 AM
Owners and operators debated the merits of TripBAM and TripAdvisor for Business during a HELP breakout session.
BOSTON—Hoteliers last week at the Hotel Equity and Lenders Perspectives Conference debated new distribution disruptors that play the game in different ways when it comes to inventory, pricing and commissions.
In a panel discussion titled “Head to head: Prime disruptors & hotel owners,” owners shared the stage with executives from travel service vendors TripAdvisor and TripBAM to go head-to-head on some of the pros, cons and misconceptions surrounding new players in the hotel distribution landscape.
TripBAM Founder and President Steve Reynolds described the company as a shopping service for travel agencies and corporations (with a consumer segment he described as “small”) that shops for lower priced rooms and/or other factors associated with a group stay on behalf of its corporate clients. These clients then might decide to rebook or change reservations based on the new options TripBAM finds.
TripAdvisor for Business VP of Industry Marketing Heather Leisman shared information about the company’s new instant booking feature that allows site visitors to book hotel rooms within the TripAdvisor site, operating through Internet booking engines, rather than the global distribution system. Hotels and traditional online travel agencies bid for the instant booking based on a commission percentage they are willing to pay for the transaction. Hotels that belong to TripAdvisor’s Business Listings service can participate.
Here are some highlights from the conversation, as moderated by PKF Hospitality Research President Mark Woodworth:
Woodworth: Why do you exist?
Reynolds: “There’s a lot of inefficiency in the (hotel pricing) market, whether you want to admit it or not. There’s a lot of rate-shifting.”
Leisman: “Businesses needed help harnessing the power (of TripAdvisor).”
Woodworth: What do these companies do to your business?
Rob Winchester, president and COO, Waterford Hotel Group: “We get a lot of benefits from TripAdvisor. It’s a great tool we use to prove our strategies. We do some business listings for our independent hotels. … Those are all positives.”
Tom Varley, VP, Ocean Properties Hotels & Resorts: “TripAdvisor has helped create more of a level playing field. Independent hotels—if you work hard at placing yourself well, TripAdvisor can be a real advantage. You want to partner with OTAs, not battle them.”
Winchester: “I haven’t really run into TripBAM yet.”
Reynolds: “You’re not really going to know if we’re doing our thing. All the rebooking is done by whoever is paying our fee—maybe that’s American Express, or a big travel agency. That’s why you haven’t run into us, and you probably won’t.”
Q: What do these new tools mean for commissions?
Leisman: “We’re not a merchant model; we’re an assisted booking model. We do a commission model, more like an agency. We work with OTAs and wanted to continue to have choice and variety for customers so we created a sort of meta model within the OTA—it’s very different. … Depending on what commission (the property pays), that drives how much of the traffic goes to your hotel versus an OTA. If you pay a 12% commission you get 25% of the business direct, or if you want 50% of the business direct you pay a 15% commission.”
Varley: “As an operator, you have to decide what commission level works. We look at each property—if a hotel is an independent heavy into OTAs, we may allow it to go anywhere. If it’s a resort, chances are people will visit the website anyway to book, so you have to weigh where your traffic will eventually end up.”
Leisman: “We really wanted to create a level playing field for independents, which is our target for Instant Booking. We also wanted to create that sense of competition. So if an OTA has a better rate … they would ultimately win in that case.”
Reynolds: “Well, with any tech startup there’s an adage of ‘follow the money,’ and we’re following the money, which is on the buy side right now. We’re not in a lot of conversations with owners and brands, even though we have been knocking on doors. There’s a lot of frustration with how this industry prices product, so we help bring transparency and discipline.”