Rate cutting hurts ancillary revenue, too

by Jason Q. Freed, Managing Editor | October 03, 2016

Seven trending hotel news stories that will impact your hotel Revenue Strategy.

1. Lowering rates can hurt other revenue streams

We've heard it all before: You take rate, not occupancy, to the bank, so hoteliers and revenue managers need to resist lowering rates in tough times. The speaker mentioned in this story presents several other arguments against unwise rate cutting, specifically the loss of accompanying revenue streams generated from higher-paying guests.

It makes sense. Someone accustomed to a $250 nightly rate is more likely to spend money in the restaurant and bar than is a guest who's paying $150. “Low room rate means clientele with a low spending power,” the speaker said. “Guests in high season have a higher spending power.”

Full story at Hotelier Middle East.

Related: Are there times you should discount to spur demand? Watch Duetto's Philip Niemann discuss below:

2. Can new Marriott improve its OTA negotiating clout?

There's been a lot of talk in recent days about the just-completed acquisition of Starwood Hotels & Resorts by Marriott International. Much of the focus has been on how the new super company will integrate the two chains’ loyalty programs. A slow and steady approach to the process seems to be in the works.

This analysis by stock watcher Motley Fool asks another question: Will the combined company and its 30 brands (with a whopping 5,700 hotels and 1.1 million rooms) be able to exercise additional leverage against online travel agencies to gain lower commission rates and improved terms?

Full story at Motley Fool.

3. Business travelers dislike corporate travel restrictions

Many business travelers are unwilling to use alternative accommodations such as Airbnb, even if their corporate travel policies allow it. That said, some travelers in this same group believe their companies’ corporate travel policies are too restrictive. The findings come from a new Egencia study of business travelers in the U.K. and worldwide.

Full story at Tnooz.

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4. IHG forging ahead with long-awaited new res system

During updates to press and the investor community last week, InterContinental Hotels Group chief executive Richard Solomons and chief commercial officer Keith Barr discussed GRS, their new Guest Reservation System that is being developed on a community model by Amadeus.

That gives IHG first-mover advantage in terms of the direction of development of the system.

It’s hoped the system will increase revenue and provide IHG with access to more data as well as improve and personalize the booking experience for customers and provide hotel owners with more flexibility around rates and ancillaries.

Full story at Tnooz.

5. Expedia’s Khosrowshahi downplays booking war

Expedia Inc. CEO Dara Khosrowshahi said at the Skift Global Forum 2016 that the notion that hotel companies like Marriott International and airlines are at war with OTAs is a mistaken way to look at the sector.

“There is a mischaracterization that this is a war,” he said. “Every business is trying to optimize for themselves over the long term. We understand when we talk to hotels that there is a conflict of interest — they have to pay our listing fee and a franchise fee.”

Full story at Skift.

6. Booking.com scraps last-minute booking app

Just 20 months ago, The Priceline Group thought it could give HotelTonight a run for its money with its launch of Booking Now. The site, like HT, aimed at travelers looking to book a room within 48 hours of arrival. For hoteliers, it presented a last-ditch chance to sell rooms that might otherwise go empty.

That experiment is over, as Priceline announced it's closing the Booking Now app. The company says travelers can still book last-minute rooms through the traditional Booking.com site.

Full story at Tnooz.

7. HotelTonight rolls out rewards program

HotelTonight upped the ante on last-minute travel distribution with the introduction of HT Perks, a program the company says is about rewards, not loyalty.

Members are eligible for room discounts and other unnamed “offers and surprises” in three levels, depending on how much they spend with the site. The lowest level of reward (discounts of 8% to 12% off standard room rates) comes after a member spends just $100.

The program is a little trickier for hotels, which get to choose whether or not they will participate. HotelTonight says it will take lower commissions on reward rooms to help hotels offset the cost of the discounts. In addition, hotels that participate in the scheme are recognized with badges on the app.

Full story at Techcrunch.

Stay up on hotel Revenue Strategy news and discuss industry tech trends in the Hotel Revenue Strategy Leaders Group on LinkedIn.


Jason Q. Freed, Managing Editor

Jason joined Duetto as Managing Editor in June 2015 after reporting, writing and editing hotel industry news for a decade at both print and online publications. He’s passionate about content marketing and hotel technology, which leads to unique perspectives on hotel distribution and revenue management best practices.

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