Timo Kettern, IT Director for Westbridge Europe brings up a few good points in his guest post on www.tnooz.com. I would agree with many of his points. Most brands focus on distribution and standards that improve the distribution of hotel rooms. That’s all great as it ultimately will help increase the overall number of bookings on one hand. However on the other hand it complicates on property services to a large extend. Hotels are forced to invest in technology not always state of the art, yes it does integrate with the brands CRS and loyalty system, but that’s mostly the end of it. Because of the required integration with the brands systems, hotels are limited in the technology they can select, it often comes at a high cost, and introducing for example new self service opportunities becomes difficult. Long certification rounds and brand control, make it difficult to quickly and cost effectively connect a self service or social app to the hotels technology system.
Now is a good time for brands to review and find a way to not only add value to a hotels distribution but also provide for easy integration to property based systems, self service solutions,if implemented well can help hotel increase the guest value per stay.
Last week I talked about the future position of distribution. Here is a great post I came across, it provides some excellent points on what to think about when selecting a new distribution system.
“For years we have seen a race to the bottom in the rapidly developing world of channel management software. New channel management systems seem to pop up like mushrooms. There are at least 50 different providers active in the market space, and each system seems to come with a lower price. Many existing players in the field participated in the pricing war and nowadays there are certain standalone channel management solutions available practically for free.
Whilst many of these tools may seem incredibly cheap, most of them are performing far below hotelier expectations. Using the tools is cumbersome, and logically hoteliers continue the search for better channel management tools. The hotel industry seems to be smartening up and is making a shift towards the tools that offer high-quality technology.”
To read the full post click here (from Xotels.com)
I have been reading around www.eyefortravel.com over the last few days and came across another article that sparked my interest. “The article Direct versus indirect distribution: making the most of a love-hate relationship.” Last week I wrote about where the hotel room of the future will be sold. What was sold through the PMS and even a CRS is more and more sold on many other channels. OTA’s help to create brand awareness and bring in new clients not currently loyal to the brand. Apple and Google are mentioned as potentially disrupting the distribution world (if they have not done so already). A couple of highlights from the article by EyeforTravel:
- hotel companies that attempt to go direct cannot ignore that travelers are driven by other priorities
- rather than thinking of the lost commission fees, hotels should think in the total marketing value the booking brings
- channels should be measured on its value propositions
- some channels will begin to offer more than just a room
- consumer is faced with many choices, and it is now very easy to use those choices
- consumers buying extras is still a great opportunity for hotels to market while the guest is on site
From this article it is easy to conclude that OTA channels will continue to grow their play in filling all hotel rooms globally. More and more OTAs appear, more of them focusing on a niche market and many more are adding a great mobile experience to their channel web site. Now let’s look at this from a technology point. What role will the PMS continue to play in selling the room and the same for CRS. Will (overtime) these two systems just become a database that holds the number of rooms which are available, with maybe a min and max price threshold to communicate to the OTAs the desired price, or will price (within reason) left for the OTAs to deal with.
If many of the rooms are sold outside control of the hotel, once the guest has booked and arrives at the hotel there are many opportunities to sell additional services or packages to the guest. Can a PMS help with that? Once at the property with a self service app, the hotel can begin to create loyalty, surely an functional opportunity for the future PMS. If hotels have a good and well connected distribution partner in place, the hotel rooms will fill, maybe at a slightly higher cost than if booked direct (although, when adding the cost of SEO and PPC is that really true?). But with the right property technology and up sell strategies in place while the guest is staying at the hotel, I believe the cost of distribution can easily be recovered from.
Such a strategy should include a strong PMS connection with self service and social staying apps!
Here is an interesting extract from a consumers report released by EyeForTravel. The report was the result of surveying and interviewing more than 8000 people across five different countries. For me the biggest interesting trend was that more and more people actively share travel experiences, recommendations and there whereabouts on Social Media sites. According to the consumer report: “Not only are they actively sharing their ideas, they are also influenced by those of others: 57% of Dutch respondents, for example, said they were influenced by positive user-generated content, according to EyeforTravel’s consumer report. Social media can certainly help our customers to share critical facts about themselves, which is very powerful tool for marketers. These can be used not only to sell more but also to communicate via a responsive medium. A large number of travel companies are working with the likes of Facebook, Twitter, Orkut, Baidu and Renren to sell travel but harnessing consumer intelligence from the social media interaction will be key.”
As a follow up to yesterday’s post about where to sell your hotel room, here is a good article posted on skift.com. Who has the best smartphone app for same day bookings? The are article reviews the apps from a consumer point of view and with the main takeaway that the winning app will make it easy for guests to find what they want and book it with the least amount of taps.
“Tonight-only deals” channels such as hoteltonight.com offer a great opportunity for hotels to fill up those rooms that would otherwise have remained empty. The downside is the discounts that run up to 70% of the normal rate. At such steep discounts hotel cannot afford to sell these rooms via their own website as it would undermine the value of other rates and products far too much. However having someone in the room to cover the expenses (plus a little extra) is far better than an empty room. Since this is a mobile guest.. the hotel should create additional opportunities for the guest to get involved and book other services of the hotel, maybe not at 70%, but still at a small discount, or try to get the guest to engage with the hotel.
The “Tonight-only deals” guest found the hotel using her mobile device, there is a good change that she might buy some other hotel services, if presented on her mobile device.
It is not that long ago, when hotel rooms were sold via voice, using the PMSs revenue management capabilities to determine the rate, price and availability. Holiday Inn invented the CRS in the late 60-ties, that enabled Holiday Inn to sell all hotels from one central point, many other big chains followed the same principle. During the 80-ties and 90-ties hotel rooms were ONLY soled through the hotels PMS, chains CRS, or travel agents using a GDS. The majority of the PMS vendors build there products during the same time, focusing their efforts on strong and complex rate strategy and revenue management features.
Than the internet appeared, now hotels needed a web site to sell their rooms. It was relatively easy to deal with, PMS and CRS vendors added a mostly basic booking engine, hotels would than integrate it with their website. Next the term OTA appeared, (virtual travel agents). Expedia was the first or one of the first, followed by Orbitz, Priceline, Hotels.com etc.. At first OTA’s were welcomed by hotels, than they became to expensive to sell rooms on. Small internet companies appeared, they would help hotels to sent as many bookings as possible to the hotel’s own website or booking engine, minimizing the cost per booking. SEO, PPC and internet marketing, was new to most hotels, so hotels contracted marketing agencies to help them to drive as much guest to their website. Today this no longer works, partially as the marketing budgets and strategies from OTA’s simply were (and are) much more effective. But also because there are simply to many OTAs hotel offer their rooms on.
Being an OTA can be good business, with Expedia, who started it, today there are hundreds of OTAs, and it seems a new one launching almost almost everyday. The latest trend is last minute mobile booking apps. A great example here is hotel tonight.com. With all these OTAs and guests actually becoming loyal to many of them, hotels cannot afford not to be available on them. Now that there are so many, hotels are in a better position to negotiate commissions and drive the cost per booking down. With a good channel manager, hotels can manage availability, price and revenue strategy, from one point.
Back to the PMS (build for voice and CRS… remember). With the hundreds of OTAs available now, controlling revenue strategies, price and availability is complex and can no longer be a “on property” function. While the PMS will continue to manage the hotels physical inventory, to have an effective and accurate revenue management strategy the hotels should partner with a strong distribution or channel manager partner. Ensure there is a strong 2-way interface with the property in place, manage room inventory from the PMS, but set price, rates and yield controls in the distribution system. Good distribution vendors are Cloud based, will be able to add new OTAs quickly and as they have more “flat” rate strategies are able to achieve greater rate parity amongst all connected OTAs.
Tomorrow there will be another OTA on which your guest wants to book your hotel, with a good PMS <> Distribution strategy, any size hotel can react quickly and maximize revenue while controlling the cost per booking.
Often I run into the comment that the hospitality industry is lacking behind when it comes to technology and most of it’s technology vendors are not known for strong innovation. When airlines started doing revenue and yield management, hotels followed later. In the 90-ties, once retailers had established shopping carts on the web, hotels followed with their version of a shopping cart, the hotel booking engine. Around 2005 or so airlines started with on-line check in… hotels are still struggling to get proper on-line check in in place, mostly because of the room key. While some vendors might not be on the bleeding edge of innovation, others are, and other industries do.
While the next wave of travelers will expect social engagement, social staying and access to the latest technology on their own or borrowed device, most hotels have not embraced much of it. Airlines on the other hand continue to come up with new things, trying to create an edge for the one thing they are not particularly well known for, … you guessed it.. Service! Delta Airlines is now installing a few thousand iPad’s on airports as detailed in a recent post on Apple Insider, in restaurants and other areas of the terminal.
I seem to think here is another and simple opportunity for hotels, with a few iPad’s in the lobby, they might be able to make the lobby experience a little more pleasant. Guests waiting on other guests, can enjoy some browsing on them, while hotels can use that opportunity to inform the guest about hotel services and surrounding events. Adding virtual concierge app to these iPads would allow guests to interact with the hotel, while waiting. The iPad’s could also be used as simple (and MUCH cheaper) kiosks for guest to check in, check out, order a drink, or book their next stay. Quantas Airlines is experimenting to see if the in seat video system can be replaced with an iPad, at boarding every passenger is issued an iPad, during flight it can be used to watch movies from the inflight entertainment system. Hotels could place a iPad in each room to enable all sorts of services, from room service, to the TV remote, or allow the guest to watch a movie from Netflix, streaming to the hotel room TV. Hotels can than do away with the expensive Video Entertaining systems at the same time, and have their guests access the service from the Cloud.
A tablet device, such as the iPad offers many and very affordable services opportunities hotels can use to differentiate especially when the strategy includes seamless connecting to the guests own device(s) as well. While airlines design these technologies to reduce cost of service processes, hotels need to offer them as an alternate opportunity. Tomorrow’s guests want it Today!