m-Travel.com and Travel Distribution News

“Web analytics data alone cannot accurately judge satisfaction”

IN-DEPTH: Evaluating a website’s performance

It is said that if one is only acting on numbers, it is impossible to accurately judge whether a user has had a satisfactory experience with a particular website.

At the end of the day, a page view is just a page view. Numbers need context to become meaningful and websites have more than one goal, be it online sales, lead generation, customer relations, etc. By segmenting the site visitors into meaningful groups first, for example, the search engine they used, keyword typed, country of origin to name just a few, and then monitoring how those segments perform across the site and convert, it is then possible to gain a good overview on how the site is performing. 

Web analytics data

Web analytics data is primarily concerned with the “what” – it is an extremely effective way of collecting clickstream data relating to what people are doing on a site and how long it is taking it, says  Vicky Brock, co-founder, Highland Business Research. To effectively judge why, and thereby whether someone was happy, frustrated satisfied, dissatisfied requires using a wider toolset.

“Web analytics data alone cannot accurately judge satisfaction,” says Brock. Does a longer time spent on site mean a visitor is engaged or lost?  Does the fact they keep coming back means they are loyal or that the site is broken and they are being kicked out of their booking.

Brock added that context is everything and part of that context comes from the visitor themselves.  To understand satisfaction, rather than click sequences, conversion rates, say ROI or revenue by traffic source, then specialist tools such as Foresee Results are required.  Foresee Results uses specific elements of satisfaction, based on survey data collected from the site, to predict which elements are the site are impacting visitor experience the most.

“Web analytics is aspect of an integrated analytical tool set, use it for “what?” and “how many?” – my advice is don’t try to use it for “why?” There are other methodologies that do “why” better,” says Brock.

Website performance reporting and analysis

Every website is different and as such will have different goals. For example, an e-commerce manager would  monitor how many visitors book hotels, how many engage with hotels (i.e. either sign up to receive offers or submit a “contact us” form), read press releases, sign up online to the loyalty programme, activate loyalty programme online, drop out during the booking process, return more than a couple of times to the site but do not book, book more than twice etc. These would be just a few of performance indicators for e-commerce, but they might not be relevant to a different website, for example, a non e-commerce one or a blog. One should use the tools to understand how customers are interacting with the site now and why they are not converting, whichever the goals might be, even if just a simple fact sheet download, if that is important to the business in question. 

The same principle applies to choosing the right web analytics tool. If goals and key performance indicators have not been established in advance, one cannot asses if a basic or more advanced analytics tool might be required. However, tools alone are not sufficient. Even the most sophisticated and expensive web analytics system is pretty useless, without the right people to use it and make those numbers “talk”.

Brock agrees and says it is a cliché, but one has to measure what matters to his/ her business.  What does online success look like to you?  Is it more revenue, money saved compared to offline servicing, higher customer satisfaction?  Its probably a combination of all three.  You have to look at the points of interaction on your site that represent those success outcomes and focus your analysis and reporting on those.

“Frankly page views, unique visitors, time on site etc are not things that management should give a damn about in isolation.  An analyst needs to understand them intimately but the business question an analyst should be answering with every report is “how is the web contributing to overall business goals today,” said Brock.

“And on the whole, it’s not about the tools. Tools are generally great. People may not pick the best solution for them, but on the whole the tools/offerings/solutions are often way ahead of most organisations abilities to use them effectively.  When organisations go through analytics tool after analytics tool, its often a symptom that they are expecting the answer to come out of a box, as opposed to investing the time and energy required to use the data being generated to answer their own specific business questions. You can get more actionable insight from a basic tool used by a great analyst, than you’ll ever get from a high end tool if there are not the people to actually generate analysis (as opposed to reporting),” explained Brock. 

Role of an analyst 

Tools, according to specialists, alone are not going to do much. Rather, one should also budget for a proficient analyst, who is then going to be able to interpret the data and provide actionable conclusions to improve the site and conversion.

Referring to an established model, Brock said for every £1 spend on the tool itself, spend £9 on the people who are going to use it.  That ratio alone should help people figure out the real level of analytics investment they are able to make. 

In terms of web analytics tools, options include Google Analytics and Yahoo at the free end, through to Webtrends, Unica, Coremetrics and Omniture at the higher investment end.  “Correctly implemented and integrated with your booking engine, you can measure the visitor from the search term they used to find the site, right through to purchase and even repeat purchase,” said Brock.   

“You cannot optimise web without the tools that measure onsite activity, so getting the tracking right is the first step in any website optimisation process.”

Remember that even the free tools require implementation, people to use them and developers time.  Paid for tools typically are priced by traffic, and may have additional usage costs beyond the initial purchase fee.  

In all cases, one needs to understand the total cost of ownership.

Appetite grows for mobile travel services: Sabre

A survey has indicated that smart phones are becoming a traveller’s preferred tool for managing post-booking activities and getting relevant information.

As per the findings a global mobile survey of travellers, conducted by Sabre Travel Network, this trend has seemingly penetrated all ages across all continents, highlighting the tremendous opportunity for travel agencies and suppliers to leverage mobile solutions to demonstrate value to their customers and creatively reach target audiences. 

The majority of travellers surveyed had a smart phone (69 percent), with North American travellers most likely to own one (78 percent) and APAC travellers least likely (46 percent). 

Daily usage is highest for email at 63 percent with Internet not far behind at 49 percent. The study also found that nearly half of all travellers (47 percent) are 40 years old or older, demonstrating that the exploding use of mobile services is not strictly the domain of younger travellers. 

Corporate and leisure travellers both showed strong adoption for using their mobile phone to gain timely and relevant information, in particular for: Flight notification (72 percent), weather forecasts (68 percent), viewing of hotel locations via map (67 percent), flight performance (65 percent) and destination information/city guides (64 percent).

Regional trends

Europeans are ranked ahead of North Americans and travellers in APAC in potential adoption of select features:

• 71 percent of Europeans are interested in using their mobile device to check in for flights, compared to 64 percent of North Americans.
• 64 percent of Europeans would like to select/change seats via their smart phone, higher than the 59 percent of North Americans.
• 55 percent of Europeans would use their mobile device to track their baggage, against 45 percent of North Americans.
• 54 percent of Europeans would like to use their smart phones to book flight upgrades, compared to 44 percent of North Americans.

Open to advertising

All travellers surveyed are willing to accept advertising with free use of travel applications. For example, 28 percent of Road Warriors said they preferred free applications with advertising, versus eight percent who preferred to pay for the application. Leisure travellers had a similar spread, with 22 percent preferring free with advertising versus five percent preferring to pay. In Europe, 14 percent of respondents preferred free with advertising versus five who prefer to pay.

“There’s been a lot of experimentation with pay-for-services in the past. With advertising emerging as a more palatable choice for travelers, application providers and retailers now have a way of monetising their offering and driving more value out of a potentially lucrative marketing channel,” said Greg Webb, chief marketing officer of Sabre Holdings.

2010 tipped to be another “bumper growth year” for online marketing spend in travel

A global survey has indicated that 2010 will be another bumper growth year for online marketing spend in travel, with over half of those surveyed indicating they plan to increase spending next year. Of that group, half plan to increase their budgets by 11-50 percent.

The survey of 225 travel companies, initiated by Frommer’s Unlimited in conjunction with TravelMole, revealed that engaging with social media is the biggest priority for travel marketers, followed by search engine optimisation, and content as the next largest areas of increasing spend. Two thirds of respondents plan to increase spending on content. 

Social media marketing is gathering attention and budget share with 60 percent reporting that they plan to increase spending this year.

“We believe one possible objective is to improve search engine marketing performance, which also reflects the fact that unique content is a priority for twice as many respondents as last year,” stated a release. 

Among the other areas respondents ranked as growing in importance are destination content (70 percent this year as compared to 20 percent last year) and addressing international markets with investment in multilingual content as a priority.

In terms of cost per visitor, 76 percent reported a cost per visitor across their online marketing mix of under $5 with 36 percent being less than $1 and 39 percent falling between $1 - 5.

Budgets for online content

Spending for online content continued to track closely to online marketing budget trends this year; however, there was a higher priority on content than online marketing. There was an increase in the percent of respondents that plan to increase spend on content or keep it at the same level, 95 percent this year compared to 90 percent last year. The majority this year (66 percent), plan to increase spending with an increase of 11-50 percent being the most common in this group. Only 5 percent planned to decrease their online content budget this year, compared to 10 percent last year.

Overall, there seems to be a much higher interest in improving the broad range of content offered by travel sites.Search engine optimisation continues to be a top priority for web content budgets this year, selected by over 84 percent of respondents, up from 67 percent last year. In tandem with this spending, unique content has shown a dramatic increase now being included in 81 percent of people’s plans, nearly double last year’s of just 41 percent. Adding destination content was in the plans of 80 percent of responders, up from 57 percent last year, as were adding events content up from 26 percent to 70 percent. There is evidence that companies are looking to international markets more this year, with the number planning to invest in multi-lingual content up from 13 percent to 79 percent. Adding to or improving hotel and property descriptions is also up from 26 percent to 76 percent and image galleries increased from 28 percent to 75 percent.

“What happens next year is open to analysis and debate potentially”

Priceline.com says its worldwide business has performed well in the wake of the financial crisis and global recession.

Going forward, near-term results will continue to show the impact of the relative strength or weakness or prior year periods and cyclical trends in demand and pricing, according to priceline.com’s president and CEO Jeffery H. Boyd.

“We believe our long-term performance will continue to be more closely tied to building our geographic and supply footprint, growing new markets, strengthening our brands worldwide, and executing on integration initiatives,” said Boyd as the company announced its third quarter results. 

Customers

Boyd, according to third quarter earnings call posted on Seeking Alpha, mentioned that the accelerating growth rate isn’t really reflective of much more than increasing new customers and repeat customers.

“We haven’t seen a remarkable trend in terms of the changing mix of customers with the exception of retail airline tickets. Retail airline shopping is pervasive on the Internet, and all of the interest in reduced and eliminated booking fees that started two years ago with us and continued with the matching has generated a lot of new customers that are coming around and shopping for an airline ticket, and that’s something that we’re happy to see in that it’s our opportunity to try to cross-sell them and bring them into the brand, especially to buy things that are uniquely ours such as the opaque product.”

Competition

“...what happens next year is open to analysis and debate potentially. On the one hand there will be an anniversarying of the fee cuts and the generation of new business that that created on the website, but on the other hand you’re also going to be lapping earnings results that reflect the benefit of reduced marketing spend,” said Robert J. Mylod Jr. - Vice Chairman of the Board, Head - Worldwide Strategy and Planning, commenting on marketing spend. 

He added, “So I don’t think it’s a foregone conclusion that our competition will be absolutely free, for example, in the case of Orbitz to reinject $38 million into their marketing spend in the third quarter of next year because I think the pressure that puts on their earnings comps is very, very significant. So my expectation is not that there’s going to be a flood of new marketing spend to try to make up for anniversarying fee cuts. I think that the competition - and this is the way we approach it - will be ROI driven and trying to execute on a rational marketing strategy that is accretive to their earnings.”

New Sheraton.com to use Facebook Connect

Sheraton Hotels & Resorts has launched the latest version of sheraton.com. The new site is the first hotel industry website to feature Facebook Connect.

The new site enables Facebook members to interact through sheraton.com over travel experiences by sharing stories, tips and photos about their best travel finds, destination favourites and passion for travel. 

Users can visit sheraton.com and now post their stories by logging into their Facebook account via Facebook Connect.

The launch of the new site is part of a $6 billion worldwide effort to revitalise the iconic Sheraton brand, including an investment of $2.3 billion in new hotels, $1.5 billion in renovations and $400 million in signature brand initiatives throughout North America.

“The new sheraton.com reflects how people communicate and stay connected today,” said Hoyt H. Harper, senior vice president for Sheraton. 

“Our guests are technologically-sophisticated travellers who are eager to share their experiences through today’s most popular social networking sites, like Facebook.”

“Business performed above our expectations in the third quarter”: Priceline

Online travel company Priceline.com’s third quarter growth rates accelerated sequentially as the summer travel season turned out to be an “exceptionally strong one”.

Priceline reported a profit of $319 million up from $84.5 million a year earlier. 

Gross travel bookings were $2.7 billion, an increase of 32.8 percent over a year ago. The company had revenues of $730.7 million, a 30.1 percent increase over a year ago. 

International operations contributed revenues of $316.9 million, a 41.7 percent increase versus a year ago.

On a global basis, priceline.com continued to increase its market share as hotel room night reservations grew by 56 percent in the 3rd quarter, propelled by strong performance in the US, Europe and Asia, said priceline.com’s president and CEO Jeffery H. Boyd.

“Internationally, our hotel business experienced gross travel bookings growth of 38 percent, or approximately 49 percent on a local currency basis, as we reaped the benefits of outstanding hotel supply, geographic expansion in high-opportunity markets and continued shift by consumers to on-line booking of hotel reservations,” said Boyd. 

“Our US business grew gross travel bookings by 25 percent as consumers continue to respond positively to our money-saving travel services. Airline ticket sales were up 30.2 percent, despite the fact that competitors’ matching fee eliminations were in place for the entire quarter. Rental car days booked increased 11.6 percent.”

Worldwide hotel room night reservations were $17.9 million for the quarter, up 56 percent year-over-year.

“While the global economic environment remains challenging, we were pleased to see accelerating growth in hotel unit sales, which allowed us to overcome the continued impact of negative year-over-year pricing and currency trends,” said Boyd.

HotelTravel.com introduces Dynamic Rate Management System

HotelTravel.com has launched its Dynamic Rate Management System (DRMS) for partner hotels. The technology provides flexibility in managing rates and inventory.

The online travel company says the system will enhance the company’s ability to expand its product selection and negotiate more direct contracts with international hotel chains.

The system has been developed in-house by the HotelTravel.com software development team.

HotelTravel.com’s CTO, Graham Johnson, said that the DRMS allows hotels to control rates and inventory on a daily basis or during a variable date range, with features that can be applied to individual business models or seasonal booking cycles.

“The beauty of the DRMS is that it allows an individual independent hotel or hotel chain an equal advantage. Either has the ability to target different markets with differentiated rates, or manage multiple promotions quickly and easily across a variety of brands,” he said. “Additional services offered within the DRMS, includes full access into our back office reservation systems for their reservations, allowing the hotel to manage many aspects of the customers reservations conveniently,” he added. 

According to Johnson, the DRMS Rate Control page allows for complete, secure management of all rates, hotel inventory, meal plans, and cancellation information for multiple room types across a broad date spectrum.  

The system would particularly appeal to hotel revenue managers, who would be able to easily enter and maintain all promotions for individual or chain hotels, stated the company.

Four times bigger than British Airways: Ryanair

Ryanair says it carried four times the UK and Europe short-haul traffic of British Airways in October.

Ryanair’s traffic grew by 15 percent in October to 6.2 million while BA’s comparable traffic fell by four percent to 1.6 million.

“Ryanair continues to grow rapidly during the recession as passengers switch to Ryanair’s guaranteed lowest fares from BA’s high fares and unjustified fuel surcharges,” said Ryanair’s spokesperson Stephen McNamara.

“Ryanair now carries four times BA’s traffic in the UK and Europe, their most important market. Ryanair will continue to grow and attract BA passengers because Ryanair will continue to lower fares,” said McNamara.

Growth

Ryanair could topple British Airways as the UK’s dominant airline within months, the low-cost carrier predicted recently. Ryanair’s passenger numbers rose to 36.4 million in the six-month period, up 15 percent from the same period last year. 

The airline is in talks with Boeing about an order for 200 new aircraft to be delivered between 2013 and 2016. 

Michael O’Leary, chief executive of Ryanair, recently said that the days of rapid expansion at Ryanair could come to a halt unless the airline struck a deal with Boeing for up to 200 new aircraft. It has 100 on order for delivery by 2012 and, if it is unable to secure the new aircraft, Ryanair will adjust its future strategy and return cash to shareholders, instead.

BA posts worst first-half results in its history

British Airways suffered a pre-tax loss of £292 million in the six months to the end of September.

The airline had posted £52m profits during the same period a year earlier.

Total revenue in the period was down 13.7 percent. Passenger revenue was down 13.6 percent, on capacity down 3 percent. Yields were down 12.2 percent, 18.2 percent excluding exchange, largely as a result of lower year on year surcharges and sales mix within cabin class.

British Airways’ chief executive Willie Walsh, said that aviation remains in recession. 

“We were quick to respond to the crisis by taking out excess capacity and, at the same time, driving down unit costs by 5.2 percent. This demonstrates how well our costs have been managed in the first half and it’s imperative we continue to deliver on our plans to reduce costs further in the second half. With revenue likely to be £1 billion lower this year, we can’t stand still and further cost reduction is essential.”

“We reduced summer schedule capacity by 3.5 percent, our costs are some £400 million lower and manpower has been cut by 1900 through reduced overtime, increased part time working and targeted voluntary redundancy. Total liquidity of some £4 billion puts us in a strong position.”

“The global airline industry is facing continued pressure on yields highlighting a significant shift within the industry. We will introduce further structural change in the second half to secure the long term future for our business. We are cutting winter capacity by six percent and making further manpower reductions of 3000 by March 2010 and permanent changes to the way we run our business.”

He added that premium leisure demand has been strong during the last six months and the airline is investing in new leisure destinations with six new routes starting this winter.

Financial position

“Our financial position is strong. Our liquidity position at the end of September was £2 billion,including £1,507 million of cash and some £460 million of general facilities. In addition we have £2 billion of committed aircraft facilities,” stated the airline.

Expedia drops phone booking fees

Expedia.com has eliminated all phone-based booking fees. The online travel company will not charge phone booking fees for any flight, car rental, hotel or cruise reservation booked by phone.

Expedia.com says it is now the only major online travel agency to offer fee-free telephone booking for air travel. 

The company added that in comparison, some online travel agencies charge as much as $25 per ticket to book via phone. Many airlines also apply as much as $25 in fees, per ticket, to book by phone.

The company eliminated online air booking fees and change fees and cancel fees on all hotel and car rental reservations in May 2009. Cruise change and cancel fees were also eliminated in May 2009 and cruise booking fees were eliminated in October 2009.

Expedia wouldn’t say exactly what percentage of its bookings are made by phone, but Forrester Research estimates about 10 percent, reported The New York Times.  The move gives Expedia a pricing advantage over airlines, which levy surcharges for phone bookings, said Henry H. Harteveldt, principal travel analyst at Forrester. Still, he does not expect that airlines will match Expedia’s decision.

Leisure business driving travel market recovery: Orbitz

Online travel company Orbitz Worldwide has posted a quarterly profit. Net income for the third quarter was $7 million compared with a net loss of $287 million last year.

Net revenue was $187 million for the third quarter, down 22 percent (21 percent on a constant currency basis) from the third quarter of last year.

This net revenue decline was due primarily to the removal of most air booking fees and the significant reduction of hotel booking fees on the company’s domestic websites, as well as a decline in average hotel room rates globally. 

The company announced $44 million in Adjusted EBITDA for the third quarter, slightly up from the third quarter of last year, despite the removal of flight booking fees, the elimination of hotel change and cancellation fees and the reduction in hotel booking fees.  

Orbitz achieved accelerating worldwide transaction growth in the third quarter and fourth quarter performance to date shows further acceleration, stated the company. 

“With regard to the market, it’s clearly very weak. We do think it is gradually improving,” Harford told Reuters in an interview. “But it’s really the leisure market that is driving the recovery right now.”

“On the other hand, it’s the business market where you’re still seeing that weakness,” Harford said. “While business travel is getting better each quarter, that is still a challenged sector.”

The company witnessed a 27 percentage point increase in the year-on-year growth rate in air tickets in the third quarter 2009 as compared with the first quarter 2009. 

In Europe, ebookers delivered 43 percent year-on-year growth in hotel room nights as a result of its migration to the global platform and improved hotel supply.

Nine months

For the nine months ended September 30, 2009, net revenue was $563 million, down 18 percent (16 percent on a constant currency basis) from the same period of 2008.  

The company reported a net loss of $319 million compared with a net loss of $307 million for the same period last year.

Orbitz confirms equity investments totalling $100m

Orbitz Worldwide has announced equity investments totalling $100 million from PAR Investment Partners and Blackstone-controlled Travelport.

PAR will exchange $49.68 million of Orbitz Worldwide senior term debt for 8.16 million shares of Orbitz Worldwide common stock.  

Travelport will purchase 9.025 million shares of newly-issued Orbitz Worldwide common stock for $5.54 per share.

Blackstone and its controlled affiliates, which include Travelport, currently own 55 percent of the company's common stock. After this investment, taking into account the dilution arising from the transactions, Blackstone and its affiliates are expected to own 54.5 percent of the company's outstanding common stock. The funds received from Travelport are expected to be used for general corporate purposes, which could include additional investments and debt repayments.

“These transactions will enable us to reduce our debt by $50 million, increase our cash by $50 million, and give us additional operating flexibility as we pursue the global hotel distribution opportunity,” said Barney Harford, president & CEO, Orbitz Worldwide.

The transactions are expected to close in January 2010 upon receipt of shareholder approval.

Under the terms of the agreements, PAR will be granted the right to name one director and Travelport will be granted the right to name one additional director to the Orbitz Worldwide Board of Directors. These additions will increase the total number of directors from eight to ten.

Kuoni Connect enhances its online booking system

Kuoni Connect, the unit of Kuoni Destination Management specialising in online distribution, has improved upon its online booking system for hotels and destination services.

Kobra, Kuoni Connect’s online booking system, now features all product information in English, German, French, Italian and Spanish, according to the company. 

An advanced booking process offers refined filter options, different views of the search results, and an interactive map allows for easy selection from a continuously developing hotel and destination services portfolio.

Further languages as well as a credit card payment option for B2B clients are additionally planned for the near future.

Partnership with TripAdvisor

Kuoni Connect has additionally signed a partner agreement with TripAdvisor. This new feature in Kobra allows clients to see independent hotel reviews from the world’s largest travel community.

Sales Force Management in Travel and Hospitality, Berlin 20-21 April 2010

I have spent a fascinating month talking to hundreds of senior travel industry execs ; people responsible for the management and structure of their business development, sales and account management teams. These individuals are accountable for the sales of millions of Euros worth of hotel rooms, holidays, flights and car hire and related inventory.

I have talked to leaders in all the verticals within the travel business and the results are stark. The recession and falling sales and resultant low commissions have made the tricky task of managing your sales teams even harder.

At this vital time, when the industry looks like it could see growth, you need your sales force out there building for a future, but the big questions are:

• What sales force structure works for the travel business?
• What CRM and mobile technology do you need to provide your sales team with to sell to the modern market? 
• What information do your sales teams need? 
• How do you make your sales teams accountable for profit and loss? 
• How do you grow sales without slashing rates? 
• What incentives work when commission is down? 
• How do you find top sales people and how do you stop them being poached?

The Sales Force Management in Travel and Hospitality Conference is to be held in a wonderful hotel in Berlin, 20-21 April 2010. This event will enable you to find out what the best in the business are doing to ensure their sales forces are informed, motivated, paid and structured for maximum growth and minimum costs.

If you want to be involved there is still time get in touch on +44 (0) 207 375 7229 or email me on rosie@eyefortravel.com and I can send you agenda as is stands and tell you which fantastic names we already have attached to the project. 

If you register before the agenda is ready you save over €400! Remember, this is only valid until 1st December 2009.

I will be finalising the agenda for publication by the 1st December,  so book before then and save a packet. We know how busy your life is so we have a very flexible cancelation policy. If the agenda is not up to your expectations (which I know won’t happen) we will refund the cash no questions ask as long as you let me know by March 31st 2010.

My lovely website designers are currently uploading a registration page for us, but in the meantime, to register please send me an email with REGISTER in the subject line with your contact details and I will sign you up. We have a number of packages which I can offer you via email until the website is uploaded.  

Rosie Akenhead
Global Events Organiser
EyeforTravel
Direct Line: 0044 207 375 7229
rosie@eyefortravel.com

Sales Force Management in Travel and Hospitality
Berlin 20-21 April 2010
http://events.eyefortravel.com/travel-sales-force-management/

Maintaining overall price parity with OTAs

IN-DEPTH: Impact of adherence to price integrity without knowing a realistic picture

Price parity plays a key role in today’s revenue management and hotel distribution strategy.

Rate parity became a major topic of discussion when OTAs switched from GDS powered rates to merchant model, extranet powered rates. Some hoteliers acknowledge that at the end of the day, it is important for hotels to differentiate between self-owned channels and third parties and realise that if for whatever reason they need to run a promotion or a rate which is below the BAR on all other channels they should rightfully do so on their brand website. 

The OTAs of course have made attempts to counter this by monitoring such disparities and imposing harsh penalties for hotels that undercut them on their own websites, they implemented new clauses into their contracts that obligated hotels to provide them with the best available rate.  In fact, some hoteliers admit that the OTAs seem to have convinced the hotel industry that the burden of rate parity lies on the shoulders of the hotels, the hotel must adjust their net rates in order to ensure the competitiveness of the OTA against other agencies. 

Setting rates 

OTAs create trial for hotel brands by reaching brand agnostic consumers who are shopping for a vacation and may not be familiar with brands.  They accomplish this in any environment, but in today’s economic climate it is critical to be represented on these channels because consumers are shopping more sites before making purchasing decisions and hoteliers want to reach the largest travel shopping audience possible.

OTAs say that they offer services to hotels that are very much tailored to market demand factors. The key factor is that price and promotions can be created, adapted, in real-time for real customers. Rates are not set seasonally, but rather daily.

Hotels that play more aggressively with OTAs and drop rates in an effort to steal market share damage the market conditions. The role of OTAs and wholesalers should not change according to economic conditions. 

From an OTA’s perspective, Rob Rosenstein, president & COO, Agoda, says even in a weak economy, there are peak periods and the reverse is also true. 

“In high occupancy environments, OTAs help hotels to raise prices and help them achieve specific developmental objectives. In low occupancy, OTAs offer growth and impulse-driven demand, where pricing and promotional strategy can be highly effective, with a fair degree of opacity,” said Rosenstein, who is scheduled to speak at the forthcoming Sales and Marketing in Travel Asia Pacific conference, to be held in Sydney (November 18-19). 

He added, “Hotels don’t need to steal market share and risk these important relationships. Maintaining overall price parity with OTAs is a highly effective strategy for both maintaining these relationships and developing the hotel’s own online channel, which will surely be the most profitable distribution channel in the years to come. There’s enough growth in online for both channels, OTA and hotel brand website, to be successful.”

Price integrity

Hoteliers strictly say that it is not acceptable to compromise on price integrity at any level of unqualified business.  In any economy there are other ways to discount and to attract additional customers that do not compromise your core pricing.  

Maintaining price integrity should be a core objective of all hotels, Rosenstein told EyeforTravel's Ritesh Gupta.

“Unfortunately, for most hotels, despite the best laid plans and forecasts, competitors’ pricing and the dynamic occupancy trends will force hotels at some level to start to compromise,” pointed out Rosenstein.

Realistic targets

Rosenstein says strict adherence to price integrity targets without adaptation to the realities on the ground at the property level would be a dangerous policy and totally unnecessary considering the options available to revenue managers today. 

“With today’s online distribution, rates are not published in brochures or for a season, so there is a degree of opacity in all online rates. They are available and potentially gone in an instant, only seen by the customers that hotels want to see them at the time hotels want customers to see them, and perhaps even tied to behaviours that hotels wish to encourage. Today’s revenue manger utilises the online channel and particularly promotional tools to distribute a variety of rates designed to attract additional customers. These rates are targeted, time-specific and only seen by real searching customers online – which means they fundamentally are not a challenge to published rate integrity,” added Rosenstein.

Sales and Marketing in Travel Asia Pacific

Rob Rosenstein is scheduled to speak at the forthcoming Sales and Marketing in Travel Asia Pacific conference, to be held in Sydney (November 18-19).

For more information, click here: http://events.eyefortravel.com/smapac/agenda.asp

Or 

Contact:
Reece Gladstone
Regional Director, Asia-Pacific & Middle East
Email: reece@eyefortravel.com