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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
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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 49 6 Voyager’s World l November 2012
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  8. 8. COVERSTORY CAN’T LIVE WITHOUT EACH OTHER! Are hotels and OTAs getting along nicely in matters like revenue-sharing? The definitive mantra guiding both the players should be based on the edifice of a marriage of convenience for mutual benefits, writes Firoz Fazil C 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 rate It is preposterous on their part to World spoke to admit that their to make it more attractive. “And might be double previous travel remain 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 why turning 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 to room bookings through OTAs at According to Manish Raj, Vice of inventory getting sold well in secure bookings for your property present may not be so encouraging. President, Hotel Relationship – Via. advance.” 24/7. They provide travellers with But hotels, faced with the double com, the hotel-OTA relationship is Jean Francois Mourier of a way to search the available whammy of increasing competition a strained one ‘to a certain extent’. REVPAR GURU, an ardent properties in their destination, so and 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 losing realising 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 with best use of all the avenues at their continuous source of dependable mistake on the part of the hotels not every business, it costs money to disposal. 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-copy to get squeamish when it comes “OTAs and hotels should work mistake not to work with traditional brochures) hotels had to spend to issues like commission sharing closely and have a better revenue travel agents in the past, today, it money on printing and distributing with the OTAs. The best bet for sharing model, which I think should is a huge mistake not to use the the brochures. Today, that expense them is to adopt an eclectic blend improve in times to come. With OTAs because the Internet is your is no longer necessary so hotels of distribution channels which increase in room supply, OTAs comprise, of course, the traditional can help in routing customers travel agents, hotels’ own websites from undefined segments to book 8 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 a should be taking that same more room bookings. “OTAs are intermediaries), so they inherently must to promote the sales of distress money, and investing it in OTA medium to generate incremental have certain advantages vis-à-vis inventory or unsold inventory and commissions,” 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 the must 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 has and make sure they have the best “With YoY increase in supply a greater number of hotel bookings just become better this year with the connections 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 booking online channel is as profitable as hotels will endeavor to secure having online access, etc.” engine and corporate / SME tool possible. 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 our Manager, Holiday Inn Mumbai occupancy or rate individually, in AxisRooms CEO Anil Kumar next product which caters to the International Airport, has a different times to come hotels will be after Prasanna feels that the current offline travel industry; they will get take on this. She does not consider GOPAR. Profitability will be the OTA-hotel relationship is going well, the same access of inventory like OTAs 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 seen is approx 30% of available CEO Sanjay Bhasin, even though inventory sold online and lowest there’s a strained OTA-hotels change due to changing consumer OTAs they don't have to be overly being 4%. He said that online relationship, the fact is that they behaviour. Today’s consumer is concerned. business is still at nascent stage can’t live without each other! As buying actively on mobile phones According to him, the OTA in 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 in we 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 to and we expect it to grow up to 30- relationship between the two. “We smart TVs which will add another continually invest, evolve, iterate and 40% by 2015-end. There is a huge should concentrate on building distribution channel.” provide the best user experience. In opportunity and have seen new a stable long-term partnership Rajesh affirms that hotels that the Indian market it will be the same OTAs like and between us,” he adds. find it hard to use OTAs have to as it is a big market and there are Splendia showing interest in India According to him, either have a way of filling the rooms left number of independent hotels who Hotel 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 resources feels that both hotels and OTAs partnership. “These are just small great rate strategy and effective and devote time to develop their recognize the shared value in crisis that come and go as soon as, online presence to drive bookings. direct booking channels. They will partnerships. “It takes time to the climate changes. As for now, If they are strategic with their use of have to continue to invest to keep develop these relationships, and we don’t need to worry much about much like anything else, the more them irrespective of this situation,” effort you can put in, the more he concludes. you stand to get out of it. We are According to Rajesh Rajan, committed to adding value to our Revenue Management Consultant hotel partners and we think this with Rethinkhotels, the hotel-OTA shows in the support we get from relationship is always strained as hotels.” the commission percentage paid Pratik Mazumder, Head of out by the hotels is ‘really high’. Marketing & Strategic Alliance, Rethinkhotels is focused on, also vouches for a very educating hoteliers in revenue healthy relationship between yatra. management, Internet marketing, com and hoteliers. He feels the reputation management and hotel relationship is getting stronger with technology. larger volumes coming from OTAs The dynamics between OTAs in 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 they since its acquisition of Travelguru: are growing really fast; they have “We do over 1000 room nights a a flexible commission structure and day.” treat the hotels fairly. It will further 10 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 minute up with OTAs, he concluded. Marriott Int'l 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 clear the commission and not the benefits commission).” is to strengthen our direct channels understanding of what commission of the online channel: the billboard He explains: “Almost 80% of the but we also have to recognize that levels are expected and the hotel effect (free marketing) and increase population in the US is using the not all customers will think about objectives for maximizing revenues. in bookings. This despite the fact that Internet every day. Online travel Marriott in the first place. Marriott He is foreseeing an increase in online is the most important source and tourism continues to experience continues to be very selective and commissions but it is “always of revenue and this will continue to solid growth and this is just the its OTA engagement strategy in balanced out in terms with additional be 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 – Associate that 100% of $0 is still zero, so it consumer craze for smartphones OTAs, he said: “OTA contribution Director of Sales, Courtyard by is 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 across 11 Voyager’s World l November 2012
  12. 12. COVERSTORY the country. There is constant and international, such as Expedia, education between the two parties, Yatra, Makemytrip, and both are working hand in hand etc. to increase revenues for their According to him, the hotel business. “Marriott has always been bookings will increase through proactive in terms of commission OTAs in the times to come. “Online sharing and has found ways in booking provides convenience and using these funds for marketing.” power to the end user to pick and Shaleen Mathur - GM sales and choose the hotel they want and marketing - Citrus Hotels & Resorts they can also review various hotels, doesn’t think that the OTA-hotel compare photos and rates, look relationship is strained at present. for some deal which a traditional “All OTAs work on different model; travel agent might not extend them some deduct their commissions in order to increase their margin. up-front and make payments to the The ultimate aim is to drive the hotels and some prefers the hotel customers who have booked you to process the commissions later. through various OTAs to your Both hotels and OTAs should be website or to other channels which pro-active on the commissions front saves you commission.” and ensure that the money is paid He foresees a future wherein to 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 around very crucial medium for bookings guest just makes the booking online share of room nights.” the world. We have negotiated as they have a good base of people without paying anything to the OTA While refusing to divulge the good term with our OTAs, so we and 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 our by 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 OTAs of commission is always a better being processed by the hotel to the and brands. Some of the biggest help them develop their business choice 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 Director basis with any of the OTA which Management, Venetian Macau Expedia. Gaurav Jain, the importance of OTAs makes 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 OTAs the risk of un-occupied rooms is to share a commission with any with the OTAs on revenue sharing. have made the market very lucrative nullified,” 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. “The contribution through OTAs is very negotiate hard for the commission less for Citrus: it is close to 6%. percentages but at the same time However, the potential, added we recognise that OTAs help drive Shaleen, is huge. Citrus is with all the customer decisions to visit the major players, both domestic Macao. We try to leverage the 12 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, today various mediums including social apps heavily promote last-minute automation system, Social media online booking accounts to almost media interface adopted by OTAs bookings (i.e. Hotel Tonight). Most marketing, channel support: B2C 25% to 30% of sales, depending to interact with the end customers of these apps are linked to existing as well as B2B.” on city to city, worldwide. There actually helps the customers to gain OTAs; so it is becoming even Rajesh Rajan puts mobile at is no stopping in growth through more information about hotels and more important to use real-time the centre of the latest trend as the this channel in future. It’s basically their deals,” he added. As of now automated revenue management ‘biggest disruptor’. “It is platform convenience and wide options the 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 the Aamod, but it’s increasing as new I see that there is an increase in Gogobot, Schemer, Trover are sector, he elaborated: “We see players 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 from Latest 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. More proliferation 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 for Trip Advisor has also become an a one-stop destination offering all for the customers but also for hotels, over 20 years we have been able important reason to decide a hotel the services under one roof,” added as it helps them reduce operation to streamline most of our backend as more and more people refer the Pratik. and infrastructure cost considerably. processes to ensure that we provide rating 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 of hidden cost or hidden of the that rooms are still available. It’s mobile devices, we are working shocks.” 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 to OTAs was introduced leaning towards lower lead periods suit their changing needs. With so to the Indian travel for bookings for both domestic many markets to cover, languages industry in early 2000. Up and international clientele. Earlier to speak, there’s a lot of complexity till the 90’s, Indians were people used to book their holidays in customisation and personalisation completely dependent on six to eight months in advance. This that is needed in an e-commerce travel 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 will the complete autonomy rapidly growing segment and one be more mobile bookings and of the entire booking that has huge potential to grow in research. procedure market transactions are expected in their to be transacted online courtesy a hands. well-established air segment which “With our back-to-back will continue to grow at a double acquisitions of Magicrooms and digit growth rate and is estimated Travelguru, we have emerged as to contribute nearly two-third of the the premiere aggregator and seller of domestic hotels and holidays OTA market in 2012.” According to him, the best is Gaurav in India. Now our customers can yet to come for the sector with Aggarwal reach out to more number of hotels broadband penetration just starting Courtyard by Marriott, across the globe. MagicRooms to take off. Online travel industry is Gurgaon offers access to a live inventory certainly up for a radical progress in of over 3,000 hotels across India coming years. With this, India is all whereas 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 have 72,000 hotels worldwide. As a part next decade. seen growth of special corporate business from the of 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 to solutions which include tickets to the bulky ledgers and reservation corporates are preferring to tie up with TMCs and use the 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 tourism India 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 and Co-founder of the Invision Air – who is vouching for the importance of the private jet 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 handle How do you perceive the the needs of these locations. The potential of private jet current needs being fulfilled are segment in India? How can for speciality tourists (religious and the segment be beneficial to wildlife) and top managements of the general aviation industry and airports there are difficulties in the 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 like private jet segment as similar to business jets are ideally suited. recession. For us the impact was Mumbai, Goa and Chandigarh with that of the mobile communications When you have 200 airports more in terms of availability of no parking available increase the segment in 1994. There is a large now accessible compared to 80, financing and investments than end user costs as the aircraft have latent demand which will take a few you can clearly understand what in terms of reduction in demand. to be constantly repositioned to years to actualise. And when it does, this can do for the Indian tourism. The current segment in India is still other airports. it has the potential to be probably It begins with a few very high-end fairly price inelastic, so regardless among the top five markets in the resorts in remote locations where of what is going on in the economy Any tie-up with the Indian world. 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 relationship from poor commercial airline number of resorts and tourists in one. We adjusted our plans due with some high-end specialised connectivity to Tier 2 and 3 cities. these locations will start to increase. to the recession by reducing our travel agents, but we hope to reach We have 400 airports in India and Eventually commercial connectivity overall fleet plan from 20 aircraft to out to more agencies in the travel commercial connectivity exists to will come and then the location has 12 and charting out a more flexible trade. We believe that our service only 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 hotels B rand familiarity and positive word-of-mouth referrals are invaluable 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 becomes promoting 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 direct on 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 privileges an airline, hotel brand or restaurant Sodexo Gift Cards, for use towards the cost of switching over is zero. If of loyalty programmes, Kamal that has not developed some type thousands of products and services a person is unhappy with a service, Deep Sharma – Head of Sales and of 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, “While its most loyal clients. business travel, Fairmont uses Resplus, a programme designed Relevance of Hotel Loyalty for corporate bookers, wherein Programmes members can earn points towards Sharon Cohen, Executive their own travel, gift certificates Director, Loyalty Marketing from from top retailers and other exciting Sharon Cohen Fairmont Hotels & Resorts asserts rewards every time they book one Fairmont Hotels that reward programmes can be a of their colleagues into a Fairmont & Resorts valuable 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 that rewards guest loyalty through besides being an effective retention S customised service levels and tool, loyalty points in hotels are pecial loyalty programmes include deep-sea fishing exclusive experiential opportunities, easy to redeem. “Hotel loyalty at Fairmont Orchid in Hawaii, private lessons in we also have our Famous Agents programmes are getting easier to programme that acknowledges use and more generous, often with painting landscapes by reputed artists at The Fairmont the travel agent as an important no blackout dates. Consumers are Jasper Park Lodge, one-on-one guided excursion distribution 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’s recognition appeals to most of us can be a very important decision- The Seasons Hotels, for instance, behaviour and preferences,” said binding 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 the repeat our action, which in this case, highest-earning customers. Seasons Hotel at Tarudhan Valley changing needs of members and refers to repeat product usage. Many Citing the initial speculation and Living Room in Goa. the importance of social media customers stick to evaluation based over airline loyalty programmes as In the same way, the Fairmont platforms, the InterContinental on core benefits of a product. Under a comparison, Catherine McNabb, President’s Club, Sharon says, seeks Hotels Group has engaged in a such circumstances, products of Vice President-Sales and Marketing, to offer its members experiences two-way communication process to similar kind appear standardised Dusit International said, “There is and factors like loyalty programmes little doubt that loyalty programmes act to tilt balances, thus influencing strongly affect consumer behaviour decisions.” – we only have to measure the He also said that business exponential growth of Frequent travellers mostly have basic boarding Flyer programmes (which many SajidMahmood and lodging expenses covered. believed was a passing trend Sarovar Hotels Loyalty programme benefits, which in the 1980’s) to understand & Resorts provide additional personal comfort the compelling attraction and and convenience, during or after effectiveness of loyalty programmes the product experience, become the as a key revenue driver.” The Dusit favourites and can act very strongly Group generates millions of dollars to 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 our hotels 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 will them as a driving factor to increase In addition to allowing hotels consumer bookings. However, to learn more about the needs of get specialized, thereby increasing outsourcing according to Sunil Kumar, Director their guests, loyalty points can opportunities and will become stronger as brands in of Rooms, the Westin Mumbai be especially useful to frequent themselves besides representing parent branding for Garden 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 are I 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 be see innovative approach by providers; they will guests who use Location Based influenced as the market share get specialized, thereby increasing outsourcing increasingly comes under pressure. Service (LBS) technology, such as opportunities and will become stronger as brands in FourSquare, Twitter and Google Loyalty programmes will carry more themselves besides representing parent branding for Latitude, to check in at hotels,” said value to the customer and mean a the customer.” Kadambini. Members who sign up higher payback by the provider and will invite technological investments serve its guests better. “Our Priority to become multi-utility,” he stated. Club Rewards (PCR), with 67 Last year, the IHG undertook million members worldwide, allows an extensive global research to members to earn points when they better understand the attitudes and stay at hotels from the IHG family habits of its guests. The findings of brands. With the use of social provided an insight into the global media, we now offer targeted rates travel loyalty marketplace and were and promotions to our Priority Club used to develop a new positioning members,” said Kadambini. “Every for Priority Club Rewards. month, on an average, 600,000 It also identified that frequent people sign up to PCR and, after travellers place a higher perceived enrolling, we find that members value on hotel loyalty programme shift over 40 per cent of their hotel currency over frequent flier miles stays to our hotel brands so that and business travellers value loyalty they benefit from the scheme.” more than price. “Hotels can also add value within these programmes New Loyalty Programmes by making reward redemption more In addition to providing convenient,” Kadambini said. access to exclusive member-only “The use of online customer events and amazing experiential opportunities, Fairmont Hotels & while they are travelling and staying Resorts has taken customisation at Fairmont hotels worldwide,” she one step further by introducing their added. ‘Passions Program’ this year. “The The Starwood, too, has programme provides an array of incorporated some new loyalty additional benefits that talk to the programmes. “Starwood Privilege Kadambini Mittal travel-related interests and passions is now changed to Eat Drink & More InterContinental that members have identified to and we have recently launched Hotels Group us 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 I special packages and opportunities the 20,000 mark we plan create n the future, loyalty programmes will get increasingly have 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 Platinum plan to continue building on this membership for high users, Gold, see innovative approach by providers; they will platform through the addition of Silver etc,” he aded. get specialized, thereby increasing outsourcing more passion related benefits like Catherine says, “We are in the opportunities and will become stronger as brands in Fairmont Fit, allowing our members process of re-engineering all the themselves besides representing parent branding for to 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 hotels. feedback sites such as TripAdvisor, partners via loyalty programmes for can damage your brand if not targeted marketing. “The information managed properly, therefore if you on customer transactions, likes, want to maximise guest retention it dislikes and preferences gives is important to understand that your brands the deep level of customer brand value goes hand in hand intelligence needed to deliver the Sunil Kumar with the success of your loyalty most relevant, highest-quality The Westin Mumbai programmes,” said Catherine. customer experience and drive Garden City Fairmont Hotels & Resorts long-term loyalty,” he said. foresees more loyalty programmes “Customer engagement is the wanting to gain the emotional loyalty journey, loyalty is the destination. of their customers by attempting to Loyalty is no longer just about better understand their customers . points, discounts, miles, and “We are also seeing many smaller independent brands / hotels joining forces 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 can programmes,” 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 worth Fabian Bartnick, Senior Hospitality Consultant for IDeaS, dwells at length on the importance 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 in I n today’s highly have 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 accurate of a guest’s preferences and total supports wiser pricing decisions, by increasing the relevance of guest information, predictive worth. This knowledge is becoming supplier choices and financial promotions to those customers who analytics and strong integration even more vital due to the growing strategies. Forecasting and are most likely to have the greatest between customer intelligence and presence 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 revenue to gain a better understanding of and costs are minimised across the campaigns, your customer base management aren’t in place, Indian their guests at a property level so entire operation. should only receive offers they are hotels face an uphill battle in first they can offer a more personalised The path to sustained likely to be interested in, based identifying and then understanding experience and maximise guest profitability and growth has taken on their product preferences and their market segments. This can loyalty 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 throwing countless advances within the portion of profit, but retail, food and cannibalising their products and will money at a marketing campaign Indian hotel sector in recent years, beverage (including restaurants also attract the right customers to that is destined to produce a many 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 take or independent properties) are still important sources of income. Hoteliers should also aim a holistic view and be focused on struggling to effectively target or With so many different business to achieve improved timing and driving value from targeted market understand their market segments. arms and management systems targeting of campaigns, based segments instead of trying the ‘one In 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 instead companies, agents and segments of total guest spend. A regular hotel is generated when and where it is integrate a complete customer which makes it hard for hoteliers to guest may not be worth as much as needed and rates are protected revenue profile, including overall drive 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 the optimization and to enhance ancillary activities within the hotel. management data means both enterprise profit contribution of customer loyalty, it is vital that local Importantly, by leveraging this departments have the information each customer. As those in the hoteliers gain a holistic view of their holistic view of a customer, hoteliers they need to make the right industry are all too aware, informed guests’ lifetime value, not just their can maximise their chances of not decisions about pricing and decisions can lead to increased room 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, can provide a true picture of a guest’s promotional tool, without a clear stay ahead of the competition, mean sending your best guests to preferred 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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