News for the Hospitality Executive |
by Pedro Colaco February, 2013 2013 is looking like yet another exciting
year for the
travel industry. Expedia and Priceline have been pushing to place
themselves as
pivotal for all travel-related decisions. So, the question is, what can
hotels
do to leverage this shifting market? Some in the industry are sending strong
signals of change. A
significant number of the top international hotel chains created
Roomkey in
2012, a new distribution portal, to compete with the OTAs. Several
Scandinavian
operators have recently suspended their contracts wit h Expedia, reacting to issues regarding
their ability to
offer the best prices themselves. The Air Transport Association
announced that
they would start offering customizable tickets, but only on their own
websites. All of these moves seem to be a departure
from standardized
mass-distribution product where price is king, to distribution control
and
product customization, where value and net margin contribution are the
key
factors. First Hotels, Nordic Choice, Scantic Hotels and Thon Hotels suspended their contracts with Expedia in order to be able to offer lower-cost products on their own websites. As we see it, this is a move towards
maximizing direct
bookings, while pressuring the OTAs (Online Travel Agencies) for better
distribution
terms. And apparently they were able to suspend their contract with
Expedia
without any major damage, because they had already established multiple
channels for their reservations. The Air Transport Association is making
strides towards
greater differentiation. The ATA recently announced that it would be
experimenting with customizable tickets and fees, but only for
passengers who
book directly on the airlines’ websites. The ATA announcement is very
interesting as it highlights the importance for hotels to differentiate
themselves beyond price, and focus on ancillary services. By allowing customers to select through the
aforementioned
customizations, even if they are not offering the lowest price in the
industry,
they are differentiating themselves from everyone else in the
customer’s eyes. Roomkey, on the other hand, is the creation
of a new
distribution push under direct hotel members’ control. The goal seems
to be to
assure a greater control of their distribution channels and associated
margins. But, if the goal is not to replace the OTAs,
why not have
the focus on their individual websites and reservation engines? Why
take on the
collective creation of roomkey.com? It could very well be that the
hotels
involved chose to create this new collective entity to push products
and
customization options that they will not offer OTAs. It seems that all the entities above have
recognized that
placing themselves in the market without any distinct traits or
services has
helped commoditize them, and pushing advantage to huge inventory
consolidators
like the OTAs. Recognizing this commoditization, they took the
necessary steps
towards differentiating their products. In the long run, being stuck
with only
price as the decision factor is prejudicial for all parties involved,
as it
will drive dwindling margins. Being able to differentiate your product is
essential. If
hotels are forced to compete solely on price, it will be a race for the
bottom
of the barrel. What can hoteliers take away? Observing the strategies above and the
events that
precipitated their implementation can give hoteliers a great deal to
take away.
Even just a glance over all of the events is enough to see how hotels
need to
diversify their digital marketing strategy and truly become
multi-channel. Furthermore, hoteliers’ digital marketing
strategy needs to
include differentiation of their product. But the examples above had a
great
deal of negotiating power, which eased their multi-channel marketing
and
product differentiation. It’s important to work out how independent
hotels and
boutique brands can achieve both of these goals, without incurring
prohibitive
costs. Some effective steps that hoteliers can take to differentiate
their
hotel, all the while improving their multi-channel digital marketing
strategy
are:
Conclusion As hoteliers take steps towards an improved
digital
marketing strategy, some common traits stand out: control,
customization,
differentiation. This shouldn’t be something that only big hotel chains
can
pursue, as with the right tools and strategy even small independent
hotels can
make sure that customers differentiate their hotel from everyone else’s. All resources provided courtesy of GuestCentric. For more information please visit: http://www.guestcentric.com |
Contact:
Pedro Colaco President and CEO GUESTCENTRIC www.guestcentric.com 196 Haviland Court Stamford CT 06903 [email protected] Phone/Cell: (203) 517-0721 |
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