Posts tagged Hotel Pricing

Online bookings have grown beyond the traditional distribution channels like OTAs & GDSs with a consistently increasing influence of social media, e-commerce sites and private sales channels. Breaking the monopoly of OTAs, these platforms have emerged as a profitable option helping hotels maximize revenue.

While there is a level of uncertainty amongst hoteliers to use these sites for tactical inventory disposal, it is also true that a lot of these arguments stem from a lack of foresight hampering business to flourish all year long. Amidst this scenario, the role of a revenue manager is constantly evolving. A sharp analyst will start exploring new areas/channels and establish closer relationships with strategic partners.

60% of Americans prefer to buy discounted items online, rather than purchase regular-priced items at retail stores. Private sales sites generated $2 billion in 2010, and are expected to generate $8 billion by 2014. Therefore it’s no surprise that private sales sites, which offer an average discount of 50% off retail prices, are becoming an increasingly popular way to shop.” 

 

- Kelton Research

It is important to bear in mind that no economic situation is permanent so a revenue manager should review and install strategies that will hold good in the long term. A short sighted outlook will only help you in the current scenario but less likely to prove helpful in a changing scenario. The way your hotel is positioned now, will greatly affect how your hotel comes through a period from cautious to optimistic market outlook.

A well thought out strategy is not about constantly changing direction; it is about setting your hotel up for the future with a range of longer term objectives.

Be it guest satisfaction, your own standards or prices, the best wholesome strategy is to make your hotel the leader in revenue optimization. Close relationships with a hotels distribution partners should be an aim of revenue managers at any time, these closer relationships can go a long way to driving volume, if revenue managers approach this opportunity cautiously.  Focus should be on establishing a Win-Win situation that protects your inventory and pricing integrity.

Poor pricing has a lot of dangerous consequences but the biggest of them all is bloodbath in the market. This helps no one apart from a discount seeking customer and ironically, in many cases, the same customer would have happily paid more instead of availing of an existing discounted rate since it’s available. Reacting to market pressure by slashing prices may provide some short term benefits, but it could pull down the entire market to lower ADR levels which take significant time to even come up to the previous price points. This is where responsible discounting comes in and a partnership with a private site helps you in building base business in your tertiary booking window without impacting your transient or negotiated segments.

However, when working with private/flash sales sites the hotelier must be careful about the following:-

• Integrity of the private site they partner. It must be a true member only site and the membership should be available with a fence around it and not just something sold easily on e-Bay.
• The deals must never be put out in a predictable manner.
• Private sites must be the chosen option to keep the customer excited so room deals, Day package, Spa package, F & B deals, MICE deals all should be flashed instead of just promotional room packages.
• The deals must be put out with a time limit or stocks last banner and not just one of the two to make it less structured and predictable.
• The deals should be fenced, well ahead in time and attractive. Remember you are attempting to garner latent demand here.
• Measure the performance of private sites and monitor them from time to time, if a site is not performing evaluate if it fits with the property profile that you represent.
• Don’t overdo it.

For OTAs: The option of offering Opaque pricing can come closest to competing on the same turf.  It is important to speak to your valuable partners to make sure that the Mystery hotel or Hotel Roulette (As some opaque products are termed) deals are different from private sites in the content and value offering. It doesn’t have to mean better or flashy but just try to make it sound different to serve its purpose.

There is no denying the fact that these new sites definitely have emerged as an interesting option in online distribution. However, in order to combat a few uncertainties that have prevented hotels from expanding their revenue and client base, hoteliers must choose the right private site while conducting a thorough analysis of their demographics in order to ensure brand integrity.

In addition, a certain level of foresight is expected from hoteliers wherein they target or not, a new segment which is unable to afford the product today. Nevertheless, hoteliers should adapt their pricing and distribution strategy that certainly incorporates a thorough feasibility evaluation around these sites besides the traditional OTAs and GDSs.

Here is the list of some of the major popular private/flash sales sites:

• Jetsetter
• VoyagePrive
• Sniqueaway
• Tablet Hotels
• TripAlertz
• Vacationist
• Mr. & Mrs. Smith
• HauteLook

For a comprehensive list of popular ones, click here.

About RateGain

RateGain offers web-based solutions to leading online travel agents, airlines, wholesalers and hotels across 70 countries.  RateGain products for the travel industry have earned numerous awards for innovation.   The company is a leader in SaaS based solutions in channel management, online brand reputation management, competitive price intelligence, and social media marketing. Established in 2004, RateGain is headquartered in India with offices in the US, Thailand, Spain, Dubai and the UK. For more information, please visit www.rategain.com.