Seven trending hotel news stories that will have an impact on your hotel Revenue Strategy.
1. STRATEGY, NOT TACTICS SHOULD DRIVE REVENUE MANAGERS
The wider use of data in pricing has changed the job from merely setting room prices and optimizing room inventory to one with a broader, more strategic mandate. The author says RMs should use the data they have at hand to "understand guests’ selection behavior, consumer psychology and their competitors’ strategies by analyzing various pieces of information."
While some of that key data resides in revenue management systems and in PMSs, RMs also need to access a variety of external data source—guest reviews, STR reports, supply pipeline information and more. By properly integrating various data sources RMs can be more strategic and more nimble in their rate and distribution decisions.
2. MARRIOTT ANGERS TRAVEL AGENTS WITH COMMISSION CUT
Not surprisingly, the travel agent community isn’t happy with Marriott International’s announcement that it is cutting commissions on group bookings from 10% to 7%, starting March 31. Marriott says the cut in commissions will enable hotel owners to make further investments in their products.
ASTA, the travel agent association, said it hopes to work with Marriott on the issue “with an eye toward ensuring positive business outcomes for all involved." Of course, since its mega-merger with Starwood Hotels, Marriott holds a lot of leverage over travel agents and presumably online travel agencies. That latter leverage has yet to materialize, however.
3. OTAS SHOULD BE WORRIED ABOUT BLOCKCHAIN
Despite all the hype about blockchain being the next big thing in travel distribution, the author thinks online travel agencies have nothing to worry about. Blockchain in its simplest form is a platform of trust, but he argues consumers primarily don't turn to OTAs because of trust: They use them because of product choice, ease of use, efficiency and the best price. Trust is a minor issue.
Instead of blockchain, he says OTAs might face other possible forms of disruption: a 3% commission platform from Airbnb; mobile startups that don't rely on Google; or perhaps Google itself. As it always has been, the future is full of potholes; we just don't know where they are.
4. MAYBE AIRBNB ISN’T ON THE VERGE OF TOTAL DOMINANCE
Stop the presses. We’ve all been led to believe that Airbnb and other sharing economy platforms would soon gain preeminence in the accommodations sector. However, a new study refutes that notion, especially when it comes to younger travelers.
According to the research, millennials, who spend $200 billion annually on travel, prefer a traditional hotel over Airbnb. While more than half of those surveyed have used a sharing economy service like Airbnb, only 23% of them say it’s their preferred type of accommodation. No matter where they stay, millennials like to travel. The survey showed that 10% of U.S. millennials plan to travel more in the future than they currently do—the only demographic on the rise.
5. THREE STRATEGIES TO ATTRACT LEISURE GUESTS
A new study by Google and Phocuswright shows it's possible to attract more leisure guests if you "meet their needs quickly, easily and with personalized solutions." Of course, that's easier said than done, so the author provides three strategies to make that happen:
- Make potential guests confident they're finding the best deal by choosing your hotel.
- Similarly, show them your deal is the best one to give them instant gratification.
- Present information and experiences that have been tailored based on guests' preferences or past behaviors.
6. LIFETIME VALUE OF SEGMENTS IS WHAT’S IMPORTANT
There’s been a lot of conversation in the hotel industry about “lifetime value of guests” as a tool to create pricing and distribution strategies. While that’s important, it might be more relevant (and practical) to determine the lifetime value of specific segments of guests and then develop tactics to attracts as many in those cohorts as possible.
The trick is to congregate like-minded loyal customers into buckets and then deploy data analysis — both generated in-house and from outside sources of behavioral data — to anticipate the needs of each segment and then tailor pricing and distribution strategies to fulfill those needs.
7. IT MIGHT BE WRONG TO FIGHT THE OTA TSUNAMI
Hotel revenue managers, GMs and owners need to give in to the fact that online travel agencies are a fact of life in hotel distribution, and that’s not a bad thing, writes the author. His main argument—and one that's hard to dispute—is that guests, and not just millennials, consistently use OTAs to book hotels because of their simplicity and breadth of offering. It's futile to resist that fact.
He adds that while hotel owners and operators have made other changes to their facilities and levels of service to please guests, they balk at embracing the distribution platform of choice for these same guests. Hard to argue against his thinking.
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