News for the Hospitality Executive |
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Tour Operators: Who's in Control?
By Jean
Francois
Mourier
August 29, 2012 Many “old-school” hoteliers still firmly believe in the efficacy of the tour operator business model… and rightly so. Although it should no longer be the only tactic that hoteliers used to bring in bookings, it still is a very important part of a successful revenue management strategy. The important part of that sentence is “no longer [should tour operators] be the only tactic that hoteliers use”. Should I repeat it again? “NO LONGER… ONLY TACTIC.” Traditionally, the average hotel would base a large percentage of their business on tour operator bookings. As you know, tour operator agreements are negotiated years in advance, guaranteeing a fixed rate for the contract period (often 1-2 years), guaranteed allotment and very short cut-off dates. Before the Internet, this was a recipe for success… but how about now? Today, the hotel industry moves at the speed of light. Rates are updated on the online travel agencies (OTAs) on a regular basis (though for most hotels, they should be updated more often – but that’s another story), the market changes from one minute to the next and the only consistency is how inconsistent it really is. In short, contracts negotiated two years, one year, six months, even last week, are all going to be out-of-date very quickly. I know, you’re probably sitting there thinking: “there is no way that I’m getting rid of my tour operator business”. Again, I’m not telling you to. Diversify your market segmentation so that you gain by selling wholesale to the tour operators, while ensuring that you aren’t cutting off other sources of business. Your hotel should be allocating rooms to various channels including tour operators, corporate accounts, consortium, online travel agencies, etc. Rates across all channels – including corporate, online and through tour operators – should be dynamic, always being updated based on market fluctuations, inventory, pricing of the competition, etc. Yup, you heard right... even your tour operator rates should fluctuate based on the market. By working with a tour operator company that offers both traditional and flexible, online rates through an extranet, you will be able to make more money through this channel. Fixed rates programs do not reflect true market conditions; on the other hand dynamic rates will allow you to capitalize on yielded rates to improve your overall business mix. An added bonus – these systems are compatible with sophisticated revenue management technology that will automatically update your rates across the online channel in real-time, greatly increasing your property’s money-making potential. Renegotiate your tour operator contracts to ensure that they are making your property money. Some ideas:
Now, go out there and be a hero. Take back control!
Jean Francois Mourier is CEO and Founder of REVPAR GURU, a company that provides hotels around the world with an alternative revenue management software system designed to deliver maximum bookings and profits. You can reach Jean Francois through www.revparguru.com or by calling 1.786.478.3500. |
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REVPAR GURU INC.
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