Who will you bill your unsold hotel rooms to?

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Who will you bill your unsold hotel rooms to?

  1. 1. WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?
  2. 2. MANAGING A HOTEL OR RESORT IS HARD
  3. 3. <ul><li>New (competing) developments </li></ul><ul><li>Competitors discounting rooms </li></ul><ul><li>Price-sensitive customers buying online </li></ul><ul><li>Constant refurbishment costs </li></ul><ul><li>Competing destinations </li></ul><ul><li>Maintenance </li></ul><ul><li>Seasonality </li></ul><ul><li>Natural disasters </li></ul>ISSUES FACING EVERY HOTEL MANAGER
  4. 4. YOUR CHALLENGE <ul><li>Find new customers </li></ul><ul><li>Maximize occupancy </li></ul><ul><li>Grow income </li></ul><ul><li>Increase profitability </li></ul><ul><li>Enhance brand image / value </li></ul><ul><li>Remain competitive </li></ul>
  5. 5. UNSOLD ROOMS = LOST REVENUE <ul><li>Every unsold room represents an opportunity to earn revenue that you will never recover </li></ul><ul><li>Your occupancy rate is limited by the number of people who see you or hear about you </li></ul>
  6. 6. DISCOUNTING IS NOT THE ONLY ANSWER
  7. 7. <ul><li>If everyone discounts then the overall perception of the market price will go down </li></ul>FACT #1
  8. 8. <ul><li>Competitors with bigger pockets could ‘out-discount’ (and out-last) you </li></ul>FACT #2
  9. 9. <ul><li>Once you become known for discounting it is very difficult to increase your price </li></ul>FACT #3
  10. 10. USING YOUR EMPTY HOTEL ROOMS TO BUY ADVERTISING
  11. 11. WHAT IF YOU COULD SWAP YOUR EMPTY ROOMS FOR ADVERTISING IN … <ul><li>Television </li></ul><ul><li>Expos and Events </li></ul><ul><li>Radio </li></ul><ul><li>Public Relations </li></ul><ul><li>Newspapers </li></ul><ul><li>Magazines </li></ul><ul><li>Internet Websites </li></ul><ul><li>Billboards & Indoor </li></ul>
  12. 13. bar·ter /ˈbärtər/ verb Oxford English Dictionary exchange (goods or services ) for other goods or services without using money
  13. 14. BARTERING … <ul><li>Conserves your cash </li></ul><ul><li>Allows you to maintain advertising budget regardless of cash sales </li></ul><ul><li>Lets you test new markets where putting cash on the line may be a risk </li></ul>
  14. 15. Doesn’t need hotel rooms in your area Doesn’t want as many hotel rooms as you need of advertising Wants hotel rooms now but you don’t want their advertising Unfortunately direct barter can be extremely difficult to organise by yourself
  15. 16. Especially on an international level
  16. 17. THAT’S WHERE WE COME IN <ul><li>Ormita can provide you with advertising on barter in the following countries: </li></ul><ul><li>Canada </li></ul><ul><li>China </li></ul><ul><li>Hong Kong </li></ul><ul><li>India </li></ul><ul><li>Jordan </li></ul><ul><li>Mexico </li></ul><ul><li>Thailand </li></ul><ul><li>USA </li></ul>
  17. 18. ORMITA ALLOWS INDIRECT BARTER <ul><li>You do not need to barter with the company you buy media from </li></ul><ul><li>Transactions are recorded in something similar to a bank statement </li></ul>
  18. 19. GET NEW CASH PAYING CUSTOMERS! <ul><li>By bartering your unsold hotel rooms for advertising you can position your brand to reach desirable corporate, group and leisure accounts. </li></ul><ul><li>You pay for your advertising using hotel rooms – not cash . </li></ul>
  19. 20. OTHER BENEFITS
  20. 21. BARTER REPRESENTS A GUARANTEED SALE <ul><li>When you make a purchase using cash you have no guarantee that you will get a new customer to buy from you </li></ul><ul><li>When you buy using barter credit then there is a guarantee that someone else in the network will buy from you </li></ul>
  21. 22. YOU KEEP THE DIFFERENCE <ul><li>The difference between the voucher and the room cost is called “breakage” </li></ul><ul><ul><li>E.g. You barter a $100 gift voucher but a one night stay may be worth $90. </li></ul></ul><ul><ul><li>No refund is given on an unused portion of a voucher </li></ul></ul><ul><li>Customers will often pay you extra cash if the voucher is slightly less than the total bill </li></ul><ul><ul><li>E.g. You barter a $100 gift voucher but a one night stay may be worth $110. </li></ul></ul>
  22. 23. PROVIDES MORE REFERRALS <ul><li>Creates more credibility than advertising alone </li></ul><ul><li>Travellers often view referral information before making online bookings </li></ul><ul><li>Builds consumer trust </li></ul><ul><li>May lead to additional cash business (and often - repeat business) </li></ul>
  23. 24. INTEREST FREE FINANCE <ul><li>Bartering offers finance without interest </li></ul><ul><ul><li>(buy now – repay with barter) </li></ul></ul><ul><li>Banks offer finance with interest </li></ul><ul><ul><li>(buy now – repay with cash) </li></ul></ul>
  24. 25. ORMITA : <ul><li>Finds you media on barter and negotiates on your behalf </li></ul><ul><li>Lets you buy media now and repay using your hotel rooms later </li></ul><ul><li>Records the value of each transaction when it takes place </li></ul>
  25. 26. TYPICAL CONCERNS ABOUT BARTERING
  26. 27. DO I HAVE TO SELL FIRST? <ul><li>No : </li></ul><ul><li>You can buy media first and sell your hotel room nights later </li></ul><ul><li>Our line of credit is interest-free </li></ul>
  27. 28. WILL I LOOSE CASH CUSTOMERS? <ul><li>Contractual provisions to only send guests during certain times of year (e.g. when you are less busy) </li></ul><ul><li>If one of our customers has stayed with you in the past 12 months then you have the right to decline them on barter </li></ul>
  28. 29. WHAT TYPE OF GUESTS WILL YOU SEND ME? <ul><li>Ormita operates a “ business to business ” barter exchange network so guests will typically be corporate business travellers and/or company owners & managers who are on vacation </li></ul><ul><li>Contractual provisions can be put into place regarding quality of the guests </li></ul>
  29. 30. WHAT HAPPENS TO THE EXTRA THINGS THESE PEOPLE WANT? <ul><li>A customer still guarantees their room and extras with a credit card </li></ul><ul><li>Extra expenses on a customers bill are settled directly by the customer with cash or credit (room service, phone calls, gift shop purchases etc) </li></ul>
  30. 31. IS IT DIFFICULT FOR MY STAFF TO MANAGE? <ul><li>No : </li></ul><ul><li>You can send end-users electronic or printed gift vouchers to present at your reception </li></ul><ul><li>Typically: a minimum 7 days advance notice is given to you for guest bookings </li></ul>
  31. 32. IS RECORD KEEPING EASY? <ul><li>Yes: </li></ul><ul><li>You receive a monthly statement which shows all purchases and expenses </li></ul><ul><li>Works just like a bank account! </li></ul><ul><ul><li>You set up a “barter” bank account </li></ul></ul><ul><ul><li>Expenses paid using barter dollars are debited from this account </li></ul></ul><ul><ul><li>Sales made on barter are credited to this account </li></ul></ul>
  32. 33. ARE THERE TAX ISSUES? <ul><li>No more than there would be for cash: </li></ul><ul><li>Income tax is paid on profit </li></ul><ul><ul><li>If you spend all the barter income that you earn you have no barter profit (and therefore no income tax) </li></ul></ul><ul><li>Sales tax / GST / VAT must be paid according to your government regulations </li></ul>
  33. 34. <ul><li>Present in 18 countries and growing </li></ul><ul><li>Customers from 54 countries </li></ul><ul><li>More than $2.6 billion USD in barter deals </li></ul><ul><li>Visit our website at: www.ormita.com </li></ul>THANK YOU! Australia: +61 7 3121 9657 Canada: +1 514 316 1025 China: +86 755 3301 1789 Egypt: +20 10 049 4600 Germany: +49 931 3069 9928 Greece: +30 211 198 2720 Hong Kong: +852 5808 2688 India: +91 120 4141 000 Indonesia: +62 817 345 516 Iran: +98 218 850 2193-4 Italy: +39 0159526193 New Zealand: +64 9 974 9159 Poland: +48 32 444 9155 South Africa: +27 21 300 2810 Sweden: +46 8 4083 9907 Turkey: +90 542 786 5969 UK: +44 203 355 1381 USA: +1 412 360 8450

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