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Working out HOTEL - OTA relationship


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Working out HOTEL - OTA relationship

  1. 1. <ul><li>Arrange mariage? </li></ul><ul><li>Happily ever after? </li></ul><ul><li>Or Divorce? </li></ul><ul><li>The question is : </li></ul><ul><li>What the future holds? </li></ul>
  2. 2. Online travel agencies are a viable distribution channel that isn’t going away and Hoteliers must continuously evolve their strategies to best take advantage. It concerns many aspects: channel management, booking behavior, data issues and how the relationship has hurt and helped hoteliers. Nowadays each hotel decides for itself but the truth is the Hotels Can’t live with them and Can’t live without them…
  3. 3. <ul><li>At the same time there are too many hotels that have stopped marketing and look at OTAs as a marketing channel instead of one distribution channel. </li></ul>
  4. 4. <ul><li>When a booking is made by an OTA, the central reservations system (CRS) is automatically updated, reducing administrative time and increasing inventory management. </li></ul><ul><li>O TA add flexibility to the hotels' rates by pushing the promotional packages as free night stays and extras . </li></ul><ul><li>A hotel has a wider access to the market, have access to better product placement on the OTA platforms and faster response times and sales service. </li></ul><ul><li>OTAs are increasingly looking at performance based marketing to help attract and convert the ‘unaligned’ travelers (the ones that do not have hotel preferences) </li></ul>
  5. 5. <ul><li>Many travelers are using the OTA to make a booking with a particular hotel. If the Hotel is not working with, for exemple, Expedia, the traveler will get a result </li></ul><ul><li>We're unable to find properties that matched your search request…. </li></ul><ul><li>Makes no good for a hotel reputation and the customer could finally go for another hotel instead. </li></ul>
  6. 6. Mark Lomanno, formerly of STR and now a board member of new BrandAnalytics
  7. 7. <ul><li>OTA offer a broad array of travel content, thus the opportunities to sell multiple products to the same traveler is amplified, as the customer have a larger choice between different hotels. </li></ul><ul><li>Luxury brands wont use the OTA platforms as they consider mass selling ‘image damaging’ </li></ul><ul><li>Hotel demand is largely inelastic, therefore a discount of 10 % can increase the occupancy rate by 4,5 % but makes the profit drop by 6%. </li></ul>
  8. 8. <ul><li>Hotels nowadays </li></ul><ul><li>are becoming </li></ul><ul><li>concerned about losing </li></ul><ul><li>control on rates, </li></ul><ul><li>distribution channels </li></ul><ul><li>and the product </li></ul><ul><li>itself due to the large </li></ul><ul><li>number of OTA… </li></ul>
  9. 9. <ul><li>Due to the difficult economic situation the demand for the OTA rises, therefore leading OTAs to increase the commissions </li></ul><ul><li>Example : “In the past, OTAs would allow hotels to choose to participate on 10% commission retail basis, and they would access rates and availability from GDS,” said Adele Gutman, VP of sales and marketing at HKHotels, a New York City boutique hotel operator that does not offer inventory on merchant model OTAs. “At some point a few years ago, some OTAs put their foot down and said they would not promote our hotels unless we switched to a merchant model basis where we would give a deeply discounted net rate and then they would mark it up significantly.” </li></ul>
  10. 10. <ul><li>Attitude # 1 : We offer the same pricing as OTAs on our website, so we want a client to visit our sites. Why should the OTA get 20 to 30% of our revenue for serving as a search engine? </li></ul><ul><li>Attitude # 2 : We spend as much of the budget as possible on driving bookings to the brand or individual hotel website, which will save in commissions </li></ul>
  11. 12. Paul Brown Hilton Worldwide HOLLYWOOD, Florida—Hilton Worldwide will take calculated steps and provide amplified resources in 2012 to assure its product is represented and sold appropriately across all channels, said Paul Brown, president of global brands and commercial services for Hilton Therefore, Brown said Hilton has formulated a four-pronged approach to distribution: 1) Direct channels must be ultimate truth and offer the best rates; 2) the entire portfolio of hotels must operate as a single system, otherwise the brand will appear schizophrenic; 3) suppliers can’t be “pennywise and pound foolish” about channel economics; and 4) third parties will be given inventory “once the hotel has its own house in order.”
  12. 13. <ul><li>To accomplish this distribution strategy successfully, Hilton will embark on some new initiatives in 2012. The company will increase spend on direct channels by more than US$100 million. </li></ul><ul><li>Hilton is in the process of rolling out a corporately funded field-based revenue management team of about 250 employees to assist individual properties with revenue management. The goal, Brown said, is to take the bonus off operators to navigate a complex set of distribution channels and instead let them focus on providing great hospitality. Admittedly, Brown said the program will closely resemble the internal market management group he helped build at Expedia ( he was he was president of the North American division before ) </li></ul>
  13. 14. <ul><li>THE GOAL is : </li></ul><ul><li>Bringing third-party functionality in house! </li></ul><ul><li>Brown addressed Hilton’s objectives regarding functionality that third-party intermediaries currently provide, such as mobile check-in, sale through opaque channels and same-day discounting. </li></ul>
  14. 15. <ul><li>OTAs should be considered a supplemental revenue driver and smart hoteliers can manipulate the availability and price of rooms to ensure a third party doesn’t steal the customer. </li></ul><ul><li>It is advised the hotels take a balanced approach—get no more than 10% of annual occupancy from OTAs and attract as much customers as possible to the domestic websites. And it never hurts to focus on the basics: great customer service! </li></ul><ul><li>  </li></ul>
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