Score one for the brands: Room Key gets loyalty rates

by Jason Q. Freed, Managing Editor | June 13, 2016

Five trending hotel news stories and Duetto’s Take on how they will impact your hotel Revenue Strategy.

1. Room Key adds hotel loyalty member access

Room Key, the hotel industry's thus-far-feeble attempt at a distribution platform to thwart the OTAs, now allows loyalty club members for 60 brands to access their special direct-booking rates.

The concept of Room Key is solid: Consumers access the site to view rates and availability for most of the major brand companies. When they decide to book, the transaction is done through the brand’s reservation engine at a very favorable commission rate. The site has been plagued since its 2012 launch by a lack of a coherent — or any — consumer marketing effort.

Duetto’s take: This is a significant lifeline for a sinking ship.

Ever since the industry’s biggest brands unveiled their plans for discounted loyalty rates, third-party distributors and metasearch sites have been trying to get their hands on them.

 Now Room Key — the booking site developed through a partnership of the industry’s top brands — has something first: the ability for travelers to shop and compare among many brands and, by signing into their loyalty program, get the lowest rate. Now it’s up to Room Key to get the word out. But, last we checked, the brands aren’t funding Room Key’s marketing.

 Regardless, Duetto is betting big on the future of personalized loyalty pricing. We see it as a strategy that allows hoteliers to build loyalty and drive direct bookings at a much smaller cost than an OTA, while remaining in parity. It will be interesting to see how close to the vest the brands keep these personalized rates.

2. Tips to control your cost of customer acquisition

No hotel guest or hotel reservation is equal, and it's important for revenue strategists to understand their properties' cost of customer acquisition and employ channel management techniques to maximize profitability from each customer’s stay.

It’s not an easy process. According to a recent article in Hotel News Now, hotel executives differ on what are acceptable customer acquisition costs, what's included in that definition and what are the best ways to control these costs. Among the issues: managing distribution channels to create an optimal mix, and determining the proper way to use OTAs.

Duetto’s take: It’s been an uphill battle for many hotels to assimilate their digital marketing and revenue management departments to the point where they can use acquisition cost data to optimize distribution strategies. But that’s where we’re headed, and the hoteliers who can get their first – or even take the best first steps – will be rewarded with increased profitability.

Duetto’s VP of Managed Services Calvin Anderson recently spoke to HSMAI’s San Diego chapter on the topic. Anderson stresses that revenue managers today have a wealth of tools and data at their disposal for learning more about their guests.

[bctt tweet="5 trending #hotel #RevenueStrategy articles and @OptimizeDemand’s take."]

3. Business travel is bouncing back

After a year-long downward trend, domestic business travel in the U.S. increased in April for the first time in 13 months. The U.S. Travel Association, which released the data, said overall travel in the U.S. rose in April for the 76th straight month.

Domestic leisure travel also increased during the month and will continue to lead the industry at least into late 2016, said the USTA.

Duetto’s take: Business travel is the heart of the hotel industry, and it’s good to see companies on the road. The health of the U.S. economy is a solid indicator of whether businesses are willing to increase their travel budgets.

While we see this as another sign that things won’t slow down over the next 18 months, we also see the reality of an economy with peaks and valleys and a cyclical industry that follows. Hope for the best, prepare for the worst.

4. GDS channel growing faster than direct bookings — so far

With all the talk and emphasis on getting consumers to book travel directly, one often-overlooked channel is the travel agent-powered GDS. In the first quarter, direct hotel bookings increased by 0.8 percentage points to 26.2% of reservations. During the same period the GDS channel GDS rose 1.3 points to 19.3% of reservations traffic, according to TravelClick data.

TravelClick said the average travel agent books 22 times more hotels in a year than a consumer does, suggesting traditional travel agents still play an important role in hotel distribution.

Duetto’s take: The GDS isn’t going away anytime soon. But what casual observers tend to confuse is the term “travel agent.” This usually doesn’t mean your downtown brick-and-mortar travel store. Those are a thing of the past. The GDS powers major travel agent platforms for big business, and to see that rise slightly faster than direct bookings doesn’t surprise.

5. Expedia launches Facebook Messenger booking bot

Mobile hotel distribution got another boost last week with the launch by Expedia of a booking bot for Facebook Messenger. The gizmo is apparently highly intuitive and easy-to-use, a plus given that Facebook's 900 million registered users form a wide spectrum of tech savviness.

Expedia officials said while it only took about five weeks to develop the bot, it builds on "years" of work with natural language processing and machine learning.

Duetto’s take: You’ve got to hand it to Expedia — they turn the money they rake in from hoteliers around and put it right back in the budget so they can be first to market with any new shiny tool that might attract your guests.

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

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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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