The OTA - Hotel story


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The OTA - Hotel story

  1. 1. 1 Voyager’s World l November 2012
  2. 2. 2 Voyager’s World l November 2012
  3. 3. 3 Voyager’s World l November 2012
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  6. 6. CONTENTS From the Editor’s Desk Dear Reader, I ncredible India has launched a new advertising campaign at the World Travel Market (WTM) London 2012. Launched by the new tourism minister K Chiranjeevi, the campaign, under the tagline ‘Find What You Seek’, will have the UK as a target market. It is a timely and apt marketing push for the Incredible India campaign. The new campaign creates an awareness of the destinations and products available in India. The aim of the campaign is to increase global visitor figures by 12% until 2016. As the name indicates, the promotional campaign sends across a message that tourists world over can find whatever they want to see while holidaying in India This is a welcome development for the Indian inbound segment, especially if we take into account the recent lifting of travel advisory by the UK for Jammu and Kashmir. This surely is going to give a boost to the tourism prospects of the scenic valley, better known for its serene lakes and houseboats. Lately the valley David Scowsill has seen the revival of tourism with foreign tourists flocking the President-CEO – World destination. The industry is earnestly wishing that no untoward Travel and Tourism incident that will mar the tourism hopes of the state will happen. Council (WTTC) In this issue we have on the cover an analysis on the relationship between OTAs and hotels. It seeks to give some insights for both the hotels and the OTAs. After all, both need each other. Also on the menu is a feature on the loyalty programmes of hotels and The US lost their significance. $600 billion (in tourism) Warm regards, in the last FIROZ FAZIL 10 years Editor due to visa refusal. OTA-hotels matrix 08 Filipino Fiesta 26 Hotel Loyalty 18 Festival Watch 42 Hospitality 24 Cruise Lounge 44 Destination 26 Incredible India 45 Flight Talk 33 Happenings 46 India Outbound 34 Top Appointments 496 Voyager’s World l November 2012
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  8. 8. COVERSTORYCAN’T LIVE WITHOUT EACH OTHER!Are hotels and OTAs getting along nicely in matters like revenue-sharing? Thedefinitive mantra guiding both the players should be based on the edifice of amarriage of convenience for mutual benefits, writes Firoz FazilC an hotels afford to ignore all those Online Travel Agencies(OTAs) out there? Obviously not! and OTAs. A strained relationship? Hardly any hotels Voyager’s online,” explained Manish. He suggests that hotels can run various promotional programmes property’s gateway to the world,” explained Jean Francois. Although the average OTA commission rateIt is preposterous on their part to World spoke to admit that their to make it more attractive. “And might be double previous travelremain OTA-agnostic in this dog- relationship with OTAs is a strained business from this source definitely agencies, the expense is worth it!eat-dog marketplace, for, there’s no one when it comes to issues like improves RevPar, with most times Explaining further as to whyturning away from the fact that OTAs revenue sharing. But, a few OTAs distressed inventories getting sold OTAs are indispensable for hotels,are here to stay. The percentage of admit that it is a problem area. at last minute or decent amount he said, “OTAs are working toroom bookings through OTAs at According to Manish Raj, Vice of inventory getting sold well in secure bookings for your propertypresent may not be so encouraging. President, Hotel Relationship – Via. advance.” 24/7. They provide travellers withBut hotels, faced with the double com, the hotel-OTA relationship is Jean Francois Mourier of a way to search the availablewhammy of increasing competition a strained one ‘to a certain extent’. REVPAR GURU, an ardent properties in their destination, soand the dwindling margins, are According to him, it is time for hotels advocate of ‘hotels-should-use-OTA’ if you aren’t online, you’re losingrealising that they have to make the to accept OTAs as an additional theory, asserts that it will be a great out on valuable visibility. Like withbest use of all the avenues at their continuous source of dependable mistake on the part of the hotels not every business, it costs money todisposal. revenue, and an effective marketing to use OTAs to their advantage. make money. Consider this: using And it is premature on their part tool. “Just like it would have been a the old business model (hard-copyto get squeamish when it comes “OTAs and hotels should work mistake not to work with traditional brochures) hotels had to spendto issues like commission sharing closely and have a better revenue travel agents in the past, today, it money on printing and distributingwith the OTAs. The best bet for sharing model, which I think should is a huge mistake not to use the the brochures. Today, that expensethem is to adopt an eclectic blend improve in times to come. With OTAs because the Internet is your is no longer necessary so hotelsof distribution channels which increase in room supply, OTAscomprise, of course, the traditional can help in routing customerstravel agents, hotels’ own websites from undefined segments to book8 Voyager’s World l November 2012
  9. 9. COVERSTORY question of bookings through OTA need to share it with OTAs to get being increased,” she added. more transactions and room nights. Abhyuday Prashad, Co- The margins for OTAs are going Founder of CheckInTonight agrees to shrink with more OTAs coming that there will always be a constant up. Most of the branded hotels like tussle between OTAs and hotels for Marriott, Accor are spending more revenue sharing. It is important for money on in-house IT to reduce both sides to appreciate the benefit business on OTAs,” added Anil. that the other is providing. According to him, OTAs are “Going forward, as online hotel looking at strong growth on non-air bookings increase as a share of total segment and the most important hotel bookings, and it will, coupled revenue and business growth is with the increase in inventory due to looked upon online hotel bookings. new hotel constructions which will He says that only people who find it drive down occupancy levels, OTAs hard to share higher commissions may have more leverage than they are small boutique hotels, home do now. Having said that, hotels stays, serviced apartments and are brands in themselves and are also the high-end luxury hotels. ultimately the service provider “Rooms distribution and for the customer (OTAs are just inventory management on OTAs is ashould be taking that same more room bookings. “OTAs are intermediaries), so they inherently must to promote the sales of distressmoney, and investing it in OTA medium to generate incremental have certain advantages vis-à-vis inventory or unsold inventory andcommissions,” he further said. revenue and increase online OTAs,” he said. OTAs also provide the platform for In short, he points out, hotels visibility. It is a source which should “Having said that, the number hotels to market themselves to themust not fear technology. They be used by the hotels as and when of traditional agents will reduce unknown customers.”should embrace these changes needed.” over time as we will certainly see He said AxisRooms’ offering hasand make sure they have the best “With YoY increase in supply a greater number of hotel bookings just become better this year with theconnections with OTA market and demand being not increased being made online due to various launch of two way channel manager,managers, to ensure that the proportionately, going forward all reasons such as greater population new version of online bookingonline channel is as profitable as hotels will endeavor to secure having online access, etc.” engine and corporate / SME toolpossible. business through low cost for hotels to manage their corporate Komal Kapoor, Asst. Revenue channels. More than focusing on Share the revenue business. “We will be launching ourManager, Holiday Inn Mumbai occupancy or rate individually, in AxisRooms CEO Anil Kumar next product which caters to theInternational Airport, has a different times to come hotels will be after Prasanna feels that the current offline travel industry; they will gettake on this. She does not consider GOPAR. Profitability will be the OTA-hotel relationship is going well, the same access of inventory likeOTAs as a crucial medium to drive key. In such scenario, there is no except a few issues on rate parity OTAs and at their own contracted and the fact that sold out updates rates with minimal technology cost. are not instant. We hope this will do well in the “On the revenue front hotels will leisure hotels segment.”9 Voyager’s World l November 2012
  10. 10. COVERSTORY The highest AxisRooms has According to Travelchacha.comseen is approx 30% of available CEO Sanjay Bhasin, even thoughinventory sold online and lowest there’s a strained OTA-hotels change due to changing consumer OTAs they dont have to be overlybeing 4%. He said that online relationship, the fact is that they behaviour. Today’s consumer is is still at nascent stage can’t live without each other! As buying actively on mobile phones According to him, the OTAin India. “At present on an average for now, it’s not possible to predict and that platform is still open for the market will continue to expand inwe can see just 10% of total sales anything about the future of the taking. The next wave is going to be the world. They have the resource toand we expect it to grow up to 30- relationship between the two. “We smart TVs which will add another continually invest, evolve, iterate and40% by 2015-end. There is a huge should concentrate on building distribution channel.” provide the best user experience. Inopportunity and have seen new a stable long-term partnership Rajesh affirms that hotels that the Indian market it will be the sameOTAs like and between us,” he adds. find it hard to use OTAs have to as it is a big market and there areSplendia showing interest in India According to him, either have a way of filling the rooms left number of independent hotels whoHotel Contracting.” hoteliers or OTAs or both have to empty. They must have a strong need distribution and exposure. The Agoda CEO Robert Rosenstein focus on building a stable long-term base business, group business, branded hotels have the resourcesfeels that both hotels and OTAs partnership. “These are just small great rate strategy and effective and devote time to develop theirrecognize the shared value in crisis that come and go as soon as, online presence to drive bookings. direct booking channels. They willpartnerships. “It takes time to the climate changes. As for now, If they are strategic with their use of have to continue to invest to keepdevelop these relationships, and we don’t need to worry much aboutmuch like anything else, the more them irrespective of this situation,”effort you can put in, the more he stand to get out of it. We are According to Rajesh Rajan,committed to adding value to our Revenue Management Consultanthotel partners and we think this with Rethinkhotels, the hotel-OTAshows in the support we get from relationship is always strained ashotels.” the commission percentage paid Pratik Mazumder, Head of out by the hotels is ‘really high’.Marketing & Strategic Alliance, Rethinkhotels is focused, also vouches for a very educating hoteliers in revenuehealthy relationship between yatra. management, Internet marketing,com and hoteliers. He feels the reputation management and hotelrelationship is getting stronger with technology.larger volumes coming from OTAs The dynamics between OTAsin the future. and hotels are changing and, Rajesh He reveals that’s adds, it has changed to some extent.hotel bookings domain is booming “If you look at theysince its acquisition of Travelguru: are growing really fast; they have“We do over 1000 room nights a a flexible commission structure andday.” treat the hotels fairly. It will further10 Voyager’s World l November 2012
  11. 11. COVERSTORY on-the-go even easier.” with respect to hotel, usually work with last room availability basis best The hotel speak available rates- a boon for hotels Prasad Iyer, Cluster Ecommerce looking to realize maximum revenue - India, Malaysia & Maldives, for rooms, especially as last minuteup with OTAs, he concluded. Marriott Intl Inc, says that OTAs bookings,” he said. Jean Francois complains that are an integral part of Marriott’s Atul Lall believes that the hotel-too many hoteliers focus only on 65% of the room rate (after paying distribution strategy. “Our main focus OTA relationship is based on a clearthe commission and not the benefits commission).” is to strengthen our direct channels understanding of what commissionof the online channel: the billboard He explains: “Almost 80% of the but we also have to recognize that levels are expected and the hoteleffect (free marketing) and increase population in the US is using the not all customers will think about objectives for maximizing bookings. This despite the fact that Internet every day. Online travel Marriott in the first place. Marriott He is foreseeing an increase inonline is the most important source and tourism continues to experience continues to be very selective and commissions but it is “alwaysof revenue and this will continue to solid growth and this is just the its OTA engagement strategy in balanced out in terms with additionalbe the case going forward. beginning of the Internet revolution. order to protect our brand.” business commitments.” “My message to hoteliers is That’s not even mentioning the Regarding the revenue from Gaurav Aggarwal – Associatethat 100% of $0 is still zero, so it consumer craze for smartphones OTAs, he said: “OTA contribution Director of Sales, Courtyard byis better to list online and make and tablets, which make bookings varies from markets to markets but Marriott, Gurgaon, feels that the remains a very small percentage.” online segment has huge potential According to him, OTAs will for a business hotel like theirs. have to better explain what service “Marriott considers Commission as they provide to hotels in order to a Cost of Doing business and hence justify the cost. Hotels are the main to yield high rated business and it is customers of every OTA. more profitable to the hotel.” For Fairmont Jaipur about He informed that Marriott has 10% of its total room revenue is contracted globally with OTAs like generated through OTAs. The Expedia, Travelocity and Agoda. hotel has tied up with MakeMyTrip, “They have also been our largest Agoda,, Expedia and supporters within the online space. Cleartrip. There is also a constant endeavour According to Atul Lall, GM, to increase the base of the OTA’s Fairmont Jaipur, OTAs are across India and across the world. becoming more influential in terms Marriott has a dedicated team, of driving room revenue to hotels, based in regional offices that are not just here in India, but worldwide gauging and contracting new as well. accounts for a region/market.” “OTA tie ups command a higher According to him, the OTA-Hotel visibility amongst consumers and relationship is growing all across11 Voyager’s World l November 2012
  12. 12. COVERSTORYthe country. There is constant and international, such as Expedia,education between the two parties, Yatra, Makemytrip,and both are working hand in hand increase revenues for their According to him, the hotelbusiness. “Marriott has always been bookings will increase throughproactive in terms of commission OTAs in the times to come. “Onlinesharing and has found ways in booking provides convenience andusing these funds for marketing.” power to the end user to pick and Shaleen Mathur - GM sales and choose the hotel they want andmarketing - Citrus Hotels & Resorts they can also review various hotels,doesn’t think that the OTA-hotel compare photos and rates, lookrelationship is strained at present. for some deal which a traditional“All OTAs work on different model; travel agent might not extend themsome deduct their commissions in order to increase their margin.up-front and make payments to the The ultimate aim is to drive thehotels and some prefers the hotel customers who have booked youto process the commissions later. through various OTAs to yourBoth hotels and OTAs should be website or to other channels whichpro-active on the commissions front saves you commission.”and ensure that the money is paid He foresees a future whereinto each other on time.” the majority of OTAs supporting strength of our OTAs to grow the bases that we can tap into and drive According to him, OTAs are a ‘Direct Payment Model’ wherein the Macao market and therefore our our destination from guests aroundvery crucial medium for bookings guest just makes the booking online share of room nights.” the world. We have negotiatedas they have a good base of people without paying anything to the OTA While refusing to divulge the good term with our OTAs, so weand a wide market. and pays directly to the hotel for revenue on room bookings through embrace the relationship. We are “So by slicing the revenue all the services rendered and the OTAs as it is `internal’, he said that in an OTA early adopt phase in ourby a few percentages in terms commissions for the same is later the hotel’s major OTAs vary by hotel market and we work with the OTAsof commission is always a better being processed by the hotel to the and brands. Some of the biggest help them develop their businesschoice and a win-win situation for OTA. ones are Agoda, Ctrip, Makemytrip, and in turn our businesses.both. We don’t work on allocation Brian Koroll, VP of Revenue Zuji, Elong, Orbitz, Rakuten and According to Aamod Directorbasis with any of the OTA which Management, Venetian Macau Expedia. Gaurav Jain, the importance of OTAsmakes it easier for us to manage Limited, says: “OTAs are our He further added: “Our company is likely to increase in the future.the inventory more dynamically and partners. We don’t find it difficult doesn’t have a strained relationship Various offers, deals from the OTAsthe risk of un-occupied rooms is to share a commission with any with the OTAs on revenue sharing. have made the market very lucrativenullified,” added Shaleen. business that is able to drive OTAs are our partners and they for the end customers, resulting Right now, the revenue room nights to our hotels. We have access to large customer in increased room bookings. “Thecontribution through OTAs is very negotiate hard for the commissionless for Citrus: it is close to 6%. percentages but at the same timeHowever, the potential, added we recognise that OTAs help driveShaleen, is huge. Citrus is with all the customer decisions to visitthe major players, both domestic Macao. We try to leverage the12 Voyager’s World l November 2012
  13. 13. COVERSTORY Hoteliers have seen that they everyone is leveraging it.” are much less profitable than the According to Anil Kumar industry originally projected. Prasanna, recently there has “Because of the increased been a great acceptance from transparency of the online channel, independent hotels to get into fixed rate channels are obsolete. Channel Manager to maximise the The main advantages offered by inventory distribution and revenue the OTAs are dynamic pricing, management. “I can see independent yield ability, last-minute bookings, hotels spending time and money to flexibility, real-time pricing updates, improve their websites, add online allotment control, etc,” he further booking engine, work on corporate said. distribution on a platform and also Sanjay Bhasin says: “OTAs direct manage offline tour operators a 25% increment in the bookings. business and we expect this trends Moreover, OTAs are witnessing to grow in coming years.” changes in their business model as, Manish Raj feels that the world just being a standalone ticketing will see hotel bookings more through agent to a full-service travel agent the OTAs in the times to come offering hotels, visa assistance, for sure. “From 2% to 3% of hotel surface transportation, packages, bookings generated through online language support, corporate travel channels 10 years back, todayvarious mediums including social apps heavily promote last-minute automation system, Social media online booking accounts to almostmedia interface adopted by OTAs bookings (i.e. Hotel Tonight). Most marketing, channel support: B2C 25% to 30% of sales, dependingto interact with the end customers of these apps are linked to existing as well as B2B.” on city to city, worldwide. Thereactually helps the customers to gain OTAs; so it is becoming even Rajesh Rajan puts mobile at is no stopping in growth throughmore information about hotels and more important to use real-time the centre of the latest trend as the this channel in future. It’s basicallytheir deals,” he added. As of now automated revenue management ‘biggest disruptor’. “It is platform convenience and wide optionsthe revenue from room bookings systems to be able to capitalize that will continue to change how available on one platter.”is not much at this point of time for on this lucrative business. Finally, the industry functions. Apps like As regards to the trend in theAamod, but it’s increasing as new I see that there is an increase in Gogobot, Schemer, Trover are sector, he elaborated: “We seeplayers are entering the market. hotels using social media sites – focused on social discovery, which more interest from clientele as well both for marketing and reservations is a big trend. The mobile platform as travel agents to book hotels fromLatest trends purposes.” allows anyone to record wherever OTA as they get complete travel Jean Francois says there is a According to him, flash sale they are and share it with anyone.” solution on one platform. Moreproliferation of new OTA apps both sites (i.e. Groupon) are losing their Emphasising the connection attractive packages, quality hotels,for Apple and Android. “These new effectiveness in the hotel market. between personalisation and timely fulfillment and better service social media, he said: “A hotel will ensure that this continues. can leverage networks like Twitter Social media, like Facebook have and Instagram to understand what also started diverting interested the guest likes, what sport they buyers to OTAs/hotels. People want watch, who they idolize, this is to see other’s experience with their very powerful information but not stay and would like to try post that.13 Voyager’s World l November 2012
  14. 14. COVERSTORY a hotel. The latest trends are the the coming years. mobile bookings which deploy Shaleen Mathur says that online ‘Smartphones’. The advances in bookings have eaten major chunk of mobile technology and availability business coming through traditional of broadband have made it easier to booking channels. “Hotels prefer search for a hotel and book through selling various packages to fence an online reservation system. their rates and prefer to sell a Value Consumers today opt for online Proposition to the consumer. People bookings in order to save time and prefer booking a bundled package avoid the hassle of unnecessary (flight + hotel) which gives them a trips to travel agencies or phone price advantage. Majority of hotel calls to the hotel.” chains want to charge a nominal fee Pratik further says: “Online if booked through their Call Centre bookings are far more convenient which will ultimately route the guest and cost-effective to compare to book the stay online which incurs room rates of different hotels online less cost to the hotel.” and then choose the best option Rajiv Malhotra feels that available. All this can be easily done creating effective process for refund from the comfort of a home. Online is a challenging task for most new hotel booking is beneficial not only OTAs. “Being in this business forTrip Advisor has also become an a one-stop destination offering all for the customers but also for hotels, over 20 years we have been ableimportant reason to decide a hotel the services under one roof,” added as it helps them reduce operation to streamline most of our backendas more and more people refer the Pratik. and infrastructure cost considerably. processes to ensure that we providerating before confirming a hotel. “Catching up with the pace of Online hotel reservations are also the best customer service to users,”Important point for an OTA is to be the growing economy, by 2012 helpful for making last minute travel he added.transparent in what it approximately arrangements as hotels sometimes Robert Rosenstein feels:sells; there cannot be one-third bring down room tariff in the event “With the widespread use ofhidden cost or hidden of the that rooms are still available. It’s mobile devices, we are workingshocks.” been estimated that more than one hard to maintain a unified Agoda Tracing the history third of global travel is likely to be product across different platforms.of OTAs, Pratik booked online by the year 2013.” Consumers are constantly evolving,Mazumder explained According to Atul Lall of Fairmont and we need to stay connected,that the concept of Jaipur, developing trends show a listen and change our business toOTAs was introduced leaning towards lower lead periods suit their changing needs. With soto the Indian travel for bookings for both domestic many markets to cover, languagesindustry in early 2000. Up and international clientele. Earlier to speak, there’s a lot of complexitytill the 90’s, Indians were people used to book their holidays in customisation and personalisationcompletely dependent on six to eight months in advance. This that is needed in an e-commercetravel agents. Gradually, the is no longer the current scenario. business of scale.”online travel industry grew In addition, a new segment that Online is the way going forward,as OTAs gave consumers is essentially B2B business is a says Komal Kapoor. There willthe complete autonomy rapidly growing segment and one be more mobile bookings andof the entire booking that has huge potential to grow in research.procedure market transactions are expectedin their to be transacted online courtesy ahands. well-established air segment which “With our back-to-back will continue to grow at a doubleacquisitions of Magicrooms and digit growth rate and is estimatedTravelguru, we have emerged as to contribute nearly two-third of thethe premiere aggregator and sellerof domestic hotels and holidays OTA market in 2012.” According to him, the best is Gauravin India. Now our customers can yet to come for the sector with Aggarwalreach out to more number of hotels broadband penetration just starting Courtyard by Marriott,across the globe. MagicRooms to take off. Online travel industry is Gurgaonoffers access to a live inventory certainly up for a radical progress inof over 3,000 hotels across India coming years. With this, India is allwhereas Travelguru reaches out set to become the top three online The trends vary from city-to-city and market-to-to over 6,500 hotels in India and travel markets in the world over the market. At Courtyard by Marriott Gurgaon, we have72,000 hotels worldwide. As a part next decade. seen growth of special corporate business from theof our special offering, we provide “Gone are the days when it was GDS perspective. As time is of the utmost essence,our customers complete holiday conceptualized as an alternative tosolutions which include tickets to the bulky ledgers and reservation corporates are preferring to tie up with TMCs and usethe hotel bookings, making Yatra book kept with the receptionist in their GDS tools to get hotel confirmations.14 Voyager’s World l November 2012
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  16. 16. PRIVATE JETS Private jet segment is the spark for stimulating tourismIndia has 400 airports, but commercial airline connectivity is pathetically low.How far developing the private jet segment will benefit the tourism industry?Voyager’s World caught up with Vinit Phatak - Chairman of Invision Group andCo-founder of the Invision Air – who is vouching for the importance of the privatejet in tourism development. 80 on weekly basis. Our private jets destination. The private jet segment millions of dollars and can have a can fly to 200 Indian airports as of is the initial spark needed to start serious impact on the purchase today. As the balance 200 airports up certain areas of India for tourism decision for a private individual as get developed further, the number and business. well as an operator. There are no reached by business jets will local manufacturers of business increase. Commercial connectivity Industry challenges jets to protect; so this duty really to these airports is still far away as There is globally a direct does not make any sense. these small locations are not yet relationship between the GDP and Parking availability: In certain developed enough to handle 70 or 130 passenger aircraft in terms of passenger loads and infrastructure; however four to 10 passenger business jets can easily handleHow do you perceive the the needs of these locations. Thepotential of private jet current needs being fulfilled aresegment in India? How can for speciality tourists (religious andthe segment be beneficial to wildlife) and top managements of the general aviation industry and airports there are difficulties inthe Indian tourism sector? corporates along with potential so if you look at the global figures parking aircraft for short and long I perceive the potential for the investors. For these clients the they have been impacted by the term. Specifically airports likeprivate jet segment as similar to business jets are ideally suited. recession. For us the impact was Mumbai, Goa and Chandigarh withthat of the mobile communications When you have 200 airports more in terms of availability of no parking available increase thesegment in 1994. There is a large now accessible compared to 80, financing and investments than end user costs as the aircraft havelatent demand which will take a few you can clearly understand what in terms of reduction in demand. to be constantly repositioned toyears to actualise. And when it does, this can do for the Indian tourism. The current segment in India is still other has the potential to be probably It begins with a few very high-end fairly price inelastic, so regardlessamong the top five markets in the resorts in remote locations where of what is going on in the economy Any tie-up with the Indianworld. only a certain top level tourists they were still flying privately. There travel trade? The latent demand comes can access and then gradually the was a slight dip but not a significant We have a limited relationshipfrom poor commercial airline number of resorts and tourists in one. We adjusted our plans due with some high-end specialisedconnectivity to Tier 2 and 3 cities. these locations will start to increase. to the recession by reducing our travel agents, but we hope to reachWe have 400 airports in India and Eventually commercial connectivity overall fleet plan from 20 aircraft to out to more agencies in the travelcommercial connectivity exists to will come and then the location has 12 and charting out a more flexible trade. We believe that our serviceonly 38 cities on a daily basis and now sprung into a major tourist aircraft induction schedule. is a high value opportunity that the Fuel Costs: For commercial travel agents can use to differentiate aviation the fuel costs make up their offering to their clients. It is 40% of the overall cost of operation, true that in the past reliable charter for general aviation this figure is partners were not available. This closer to 25%. So, although the is primarily because most of the impact is not as high, it still affects charter operators who actually overall pricing. If we can have the own their aircraft have a priority sales taxes, that can be up to 28%, for internal use. Charter is only a reduced to reasonable levels this side revenue earner. Often when will help ‘fuel’ the industry growth. an aircraft is booked by a charter Customs duty: Nowhere else client it will get cancelled at the last in the world is there a custom minute since the owner wishes to duty on aircraft. In India the duty fly. This is not the case with us, as ranges from 25% to 2.5% which is we are a pure charter operator with extremely high for aircrafts that cost our own aircraft.16 Voyager’s World l November 2012
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  18. 18. HOTEL LOYALTY Your’s Loyally How pertinent and relevant are loyalty programmes when it comes to customer retention? Irene Susan Eapen analyses various loyalty programmes of a few Indian hotelsB rand familiarity and positive word-of-mouth referrals areinvaluable tools when it comes to travel. We reward them with special rates and unique benefits when they book guests into our hotels upgrades and other perks.” According to Sajid Mahmood, Vice President-Marketing, Sarovar that service and use another one. Hence, a bonding instrument like a loyalty programme becomespromoting your business and an and resorts. As a new benefit for hotels Private Ltd, with increasing critical,” he said.opportunity no one wants to leave travel professionals in India, points competition, loyalty programmes Giving an outline of the directon the table. These days, it would earned through the Famous Agents are no longer a USP, they are a benefits, service level upgrades,be difficult if not impossible to name programme can be redeemed for necessity. “In the hospitality sector, price advantages and privilegesan airline, hotel brand or restaurant Sodexo Gift Cards, for use towards the cost of switching over is zero. If of loyalty programmes, Kamalthat has not developed some type thousands of products and services a person is unhappy with a service, Deep Sharma – Head of Sales andof programme to reward and retain across India,” she said. As for all he or she has to do is to stop Marketing, Hotel Ista, said, “Whileits most loyal clients. business travel, Fairmont uses Resplus, a programme designedRelevance of Hotel Loyalty for corporate bookers, whereinProgrammes members can earn points towards Sharon Cohen, Executive their own travel, gift certificatesDirector, Loyalty Marketing from from top retailers and other exciting Sharon CohenFairmont Hotels & Resorts asserts rewards every time they book one Fairmont Hotelsthat reward programmes can be a of their colleagues into a Fairmont & Resortsvaluable method to build and retain property on business travel.customer loyalty. Seconding Sharon’s opinion, “At Fairmont, in addition to our Rainer Stoll, Managing Director,Fairmont President’s Club which Seasons Hotels, also feels thatrewards guest loyalty through besides being an effective retention Scustomised service levels and tool, loyalty points in hotels are pecial loyalty programmes include deep-sea fishingexclusive experiential opportunities, easy to redeem. “Hotel loyalty at Fairmont Orchid in Hawaii, private lessons inwe also have our Famous Agents programmes are getting easier toprogramme that acknowledges use and more generous, often with painting landscapes by reputed artists at The Fairmontthe travel agent as an important no blackout dates. Consumers are Jasper Park Lodge, one-on-one guided excursiondistribution channel for selling luxury signing upto earn free hotel rooms, through the art galleries near Fairmont Beijing.18 Voyager’s World l November 2012
  19. 19. HOTEL LOYALTY CatherineMcNabb Dusit International T ransparency and simplicity are key trends. Customers want recognition, flexibility and ease when redeeming rewards, by phone, in person or via the internet. Strategies to protect hard-earned brand equity and revenues resulting from negative online postings will continue to be important trends. particular, value not only the points that are less transactional and they earn when they stay, but more emotional through personal also the recognition they receive recognition of their preferences, as they move through the tiers of elite on-site benefits and engaging the programme,” said Kadambini opportunities to explore their Mittal, Director Commercial SWA, destinations. InterContinental Hotels Group “Programmes like Subway’s (IHG). Sub Club and a stamp-based loyalty Having realised the role of programme, which customers loyalty programmes in customer could earn by purchasing products retention, hotels are going all out to and redeem for rewards, are now stand apart in the market and offer far more advanced and can be the best deals to their customers. tailored to suit individual customer’srecognition appeals to most of us can be a very important decision- The Seasons Hotels, for instance, behaviour and preferences,” saidbinding us in a relationship, reward maker, especially for frequent has launched the Seasons Elite Sunil.acts like a positive reinforcement to travellers, who are often the hotels’ Privileged Programme for the Taking in to account therepeat our action, which in this case, highest-earning customers. Seasons Hotel at Tarudhan Valley changing needs of members andrefers to repeat product usage. Many Citing the initial speculation and Living Room in Goa. the importance of social mediacustomers stick to evaluation based over airline loyalty programmes as In the same way, the Fairmont platforms, the InterContinentalon core benefits of a product. Under a comparison, Catherine McNabb, President’s Club, Sharon says, seeks Hotels Group has engaged in asuch circumstances, products of Vice President-Sales and Marketing, to offer its members experiences two-way communication process tosimilar kind appear standardised Dusit International said, “There isand factors like loyalty programmes little doubt that loyalty programmesact to tilt balances, thus influencing strongly affect consumer behaviourdecisions.” – we only have to measure the He also said that business exponential growth of Frequenttravellers mostly have basic boarding Flyer programmes (which many SajidMahmoodand lodging expenses covered. believed was a passing trend Sarovar HotelsLoyalty programme benefits, which in the 1980’s) to understand & Resortsprovide additional personal comfort the compelling attraction andand convenience, during or after effectiveness of loyalty programmesthe product experience, become the as a key revenue driver.” The Dusitfavourites and can act very strongly Group generates millions of dollarsto influence usage decisions. in revenue for accommodation I n the future, loyalty programmes will get increasingly On the other hand, while most and food and beverage via ourhotels have loyalty programmes, loyalty programmes each year, she segmented to retain key market segments,most place very little importance on added. see innovative approach by providers; they willthem as a driving factor to increase In addition to allowing hotelsconsumer bookings. However, to learn more about the needs of get specialized, thereby increasing outsourcingaccording to Sunil Kumar, Director their guests, loyalty points can opportunities and will become stronger as brands inof Rooms, the Westin Mumbai be especially useful to frequent themselves besides representing parent branding forGarden City, loyalty programmes travellers. “Frequent travellers, in the customer.”19 Voyager’s World l November 2012
  20. 20. HOTEL LOYALTY primarily on member feedback and for the service earn loyalty points the necessity to leverage more every time they sign into major LBS effectively on technology, for better apps at any of our 4,480 hotels. and faster service to our guests and The IHG also launched an online loyalty members.” gaming platform, when it awarded Kamal Deep Sharma The IHG has also come up almost three million points a week with a host of new rewarding ideas during a promotional period last Ista Hotels for its guests such as the Priority year to PCR members who took Club Rewards® Sweepstakes, an part in a new game, called ‘Win it industry-first redemption option in a Minute’. that enables members to instantly redeem their points for entries into a Trends prize draw in the UK, USA, Canada, Loyalty programmes areI n the future, loyalty programmes will get increasingly China and Japan. projected to be more flexible on segmented to retain key market segments, “Our new Topguest service is rewards in the coming future, said the first hotel scheme to reward Kamal. “The future trends will besee innovative approach by providers; they will guests who use Location Based influenced as the market shareget specialized, thereby increasing outsourcing increasingly comes under pressure. Service (LBS) technology, such asopportunities and will become stronger as brands in FourSquare, Twitter and Google Loyalty programmes will carry morethemselves besides representing parent branding for Latitude, to check in at hotels,” said value to the customer and mean athe customer.” Kadambini. Members who sign up higher payback by the provider and will invite technological investmentsserve its guests better. “Our Priority to become multi-utility,” he stated.Club Rewards (PCR), with 67 Last year, the IHG undertookmillion members worldwide, allows an extensive global research tomembers to earn points when they better understand the attitudes andstay at hotels from the IHG family habits of its guests. The findingsof brands. With the use of social provided an insight into the globalmedia, we now offer targeted rates travel loyalty marketplace and wereand promotions to our Priority Club used to develop a new positioningmembers,” said Kadambini. “Every for Priority Club Rewards.month, on an average, 600,000 It also identified that frequentpeople sign up to PCR and, after travellers place a higher perceivedenrolling, we find that members value on hotel loyalty programmeshift over 40 per cent of their hotel currency over frequent flier milesstays to our hotel brands so that and business travellers value loyaltythey benefit from the scheme.” more than price. “Hotels can also add value within these programmesNew Loyalty Programmes by making reward redemption more In addition to providing convenient,” Kadambini said.access to exclusive member-only “The use of online customerevents and amazing experientialopportunities, Fairmont Hotels & while they are travelling and stayingResorts has taken customisation at Fairmont hotels worldwide,” sheone step further by introducing their added.‘Passions Program’ this year. “The The Starwood, too, hasprogramme provides an array of incorporated some new loyaltyadditional benefits that talk to the programmes. “Starwood Privilege Kadambini Mittaltravel-related interests and passions is now changed to Eat Drink & More InterContinentalthat members have identified to and we have recently launched Hotels Groupus in their profiles. From ‘Food SPG Restaurants & Bars,” stated& Drink’, ‘Arts & Entertainment’, Sunil.‘Leadership & Philanthropy’, ‘Spa Sajid said the current loyalty& Fitness’, ‘Shopping & Style’ or base of Sarovar Hotels is about‘Sports & Adventure’, a number of 8000 members. “Once we cross Ispecial packages and opportunities the 20,000 mark we plan create n the future, loyalty programmes will get increasinglyhave been developed to appeal to different tiers of the programme segmented to retain key market segments,each category,” said Sharon. “We i.e., something like a Platinumplan to continue building on this membership for high users, Gold, see innovative approach by providers; they willplatform through the addition of Silver etc,” he aded. get specialized, thereby increasing outsourcingmore passion related benefits like Catherine says, “We are in the opportunities and will become stronger as brands inFairmont Fit, allowing our members process of re-engineering all the themselves besides representing parent branding forto enhance their lifestyle passions existing loyalty programmes based the customer.”20 Voyager’s World l November 2012
  21. 21. HOTEL LOYALTY Hotels Loyalty Programmes InterContinental Hotels Reward Nights: For a free night at any of our hotel Group Travel: On airline, hotel and travel packages Merchandise & Entertainment: On electronic items, magazines, accessories Gift Cards: Wide selection of gift cards from leading retailers Charitable donations: Donate points to select NGOs Experience: Opportunities to enjoy vineyards, sports, food, etc Other rewards like No Blackout Dates, Points & Cash, ‘Flights Anywhere, Hotels Anywhere’, No Points Expiration Westin Mumbai Garden Starwood Preferred Guest: Room Loyalty Programme across all Starwood Hotels City With complimentary enrolment Eat Drink & More: F& B discount programmes Westin Retreat: Westin WorkOut Fitness Centre and Spa of The Westin Mumbai Garden City Dusit International Dusit Gold Program: For repeat guests and new customers Dusit Stars Program: For individuals who book accommodation and meeting facilities on behalf of their organisations. Wine and Dine Program: To drive revenue in dining outlets and increase spend in all areas of the hotel including accommodation Fairmont Hotels & Resorts Club: For new members Premier: For members with five stays or 10 room nights in a calendar year Platinum: For members with 10 stays or 30 room nights in a calendar year Great Rates-Great Dates: For members with significant savings at select Fairmont properties over a range of dates Fairmont Moments for President Club members: Bringing fantasy bucket list trips Complimentary BMW chauffeured shuttle service and BMW bicycles to explore places Ista Hotels Ista Select: For guests using accommodation Ista Hi Life: For diners Namaskar: For bookers who are an integral part of the buying process. Sarovar Hotels & Resorts SarovarRewards: Loyalty points for the money spent Restaurant Discount Card: These are managed by individual hotels to promote food sites such as TripAdvisor, partners via loyalty programmes forcan damage your brand if not targeted marketing. “The informationmanaged properly, therefore if you on customer transactions, likes,want to maximise guest retention it dislikes and preferences givesis important to understand that your brands the deep level of customerbrand value goes hand in hand intelligence needed to deliver the Sunil Kumarwith the success of your loyalty most relevant, highest-quality The Westin Mumbaiprogrammes,” said Catherine. customer experience and drive Garden City Fairmont Hotels & Resorts long-term loyalty,” he said.foresees more loyalty programmes “Customer engagement is thewanting to gain the emotional loyalty journey, loyalty is the destination.of their customers by attempting to Loyalty is no longer just aboutbetter understand their customers . points, discounts, miles, and“We are also seeing many smallerindependent brands / hotels joiningforces to create more powerful rewards; it is about the way processes, technologies, ideas, and interactions engage individuals with W hile most hotels have loyalty programmes, most place little importance on loyalty programmes as a driving factor to increase consumer bookings.alliances through joint loyalty the brand and effectively render However, the truth is that loyalty programmes canprogrammes,” Sharon said. a quality experience at all touch be a very important decision-maker, especially for Rainer foresees hotels use points at all stages of the customer frequent travellers, who are often the hotel’s highest-more of rich information on buying life cycle,” Rainer concluded. earning customers.21 Voyager’s World l November 2012
  22. 22. TOP VIEW Hotelier insights: Knowing a guest’s true worthFabian Bartnick, Senior Hospitality Consultant for IDeaS, dwells at length on theimportance of sensing the true value of guests for increased guest satisfaction,loyalty and profitability for Indian hotels value considering all ancillary and valuable customers. Common solutions with predictive analytics spend, from the time they make promotions include percentage and optimisation capabilities are an online reservation to the time discounts, based on the length of a needed. they check-out. This should include guest’s stay. While this has proven The next generation of revenue everything from food service to the to be a useful strategy for retaining management systems will consider day spa usage, guest rooms to gift existing customers, it is less not only the optimal set of prices shop purchases and more. effective in attracting new business, to offer, but also who to offer those In addition to making more and, as well as undermining the prices to, which guests are most profitable decisions about which hotel’s perceived value, it can also valuable and which are most likely guests’ reservation requests to sabotage potential revenue. to develop a long term relationship accept, a deeper understanding Hoteliers should instead focus with the company. of guest preferences leads to on strategies to attract specific This demand-centric view of better decisions about promotions, markets, with targeted initiatives revenue management results inI n today’s highlyhave a heightened understanding competitive Indian hotel sector, it is vital to service offerings, inventory levels and F&B options. Furthermore, this integrated customer behaviour data that drive new customers into their hotels and increase their share in the market. This is achieved long term, sustainable revenue performance, but relies on centralised credible and accurateof a guest’s preferences and total supports wiser pricing decisions, by increasing the relevance of guest information, predictiveworth. This knowledge is becoming supplier choices and financial promotions to those customers who analytics and strong integrationeven more vital due to the growing strategies. Forecasting and are most likely to have the greatest between customer intelligence andpresence of third party wholesalers optimisation then provide controls lifetime value. For example, instead revenue optimisation systems.and OTAs. Local hoteliers need to ensure revenues are optimised of sending blanket marketing If the fundamentals of revenueto gain a better understanding of and costs are minimised across the campaigns, your customer base management aren’t in place, Indiantheir guests at a property level so entire operation. should only receive offers they are hotels face an uphill battle in firstthey can offer a more personalised The path to sustained likely to be interested in, based identifying and then understandingexperience and maximise guest profitability and growth has taken on their product preferences and their market segments. This canloyalty in the future. a turn for hotels across the country. previous purchases. Using this be a labour intensive process and While there have been Room rates still bring in the highest approach will protect hoteliers from puts hoteliers at risk of throwingcountless advances within the portion of profit, but retail, food and cannibalising their products and will money at a marketing campaignIndian hotel sector in recent years, beverage (including restaurants also attract the right customers to that is destined to produce amany hoteliers (in particular – used by outside customers), spas the right products without a ‘free for negative return on investment.smaller, locally owned hotel chains and entertainment are increasingly all’ scenario. Revenue management must takeor independent properties) are still important sources of income. Hoteliers should also aim a holistic view and be focused onstruggling to effectively target or With so many different business to achieve improved timing and driving value from targeted marketunderstand their market segments. arms and management systems targeting of campaigns, based segments instead of trying the ‘oneIn many cases there is an overlap being used across hotels these days, on forecasted demand by market size fits all approach’.between channels, sources, it is difficult to get a complete view segment and property, so demand The approach should insteadcompanies, agents and segments of total guest spend. A regular hotel is generated when and where it is integrate a complete customerwhich makes it hard for hoteliers to guest may not be worth as much as needed and rates are protected revenue profile, including overalldrive specific, targeted promotions. a guest that stays infrequently, but during peak periods. Integrating ancillary spend and set hotel room For the sake of ongoing revenue who spends freely on a variety of this marketing data with revenue control and pricing based on theoptimization and to enhance ancillary activities within the hotel. management data means both enterprise profit contribution ofcustomer loyalty, it is vital that local Importantly, by leveraging this departments have the information each customer. As those in thehoteliers gain a holistic view of their holistic view of a customer, hoteliers they need to make the right industry are all too aware, informedguests’ lifetime value, not just their can maximise their chances of not decisions about pricing and decisions can lead to increasedroom rate spend. only winning, but keeping their best promotions placement. guest satisfaction, loyalty and Data from all transaction customers. Often Indian hoteliers Today’s intelligent hotelier profitability, whereas assumptions,systems needs to be integrated to use straight discounting as a is recognising that in order to or poorly planned decisions, canprovide a true picture of a guest’s promotional tool, without a clear stay ahead of the competition, mean sending your best guests topreferred activities and their overall long-term strategy for attracting new more advanced decision support a competitor.22 Voyager’s World l November 2012
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