By Jean Francois Mourier 
March 21, 2013

The hotel industry is constantly changing, and evolving as technology evolves. That means that our pricing strategies, operations and overall business goals need to change as well. But because it can be tough to stay on top of what's new, I have put together this quick overview of the top three new online sites that will have a big effect on hotels' revenue management strategy and revenues.
 
BackBid
According to their website, Backbid is a "hotel booking website that revolutionizes how travelers book hotel rooms. BackBid empowers you, the traveler, to find the best possible hotel room, for the best price, with no elaborate or time-consuming searches necessary. By posting your existing hotel reservation to BackBid, hotels are able to see your travel plans and offer bids for your business, offering either discounts or value-added services, like upgraded rooms, free parking or breakfast."
 
In plain ol' English, what does this mean? After booking a hotel stay with another property through the customer's channel of choice, they post their reservation details to the site (including star rating, price, room type, special needs, etc.). Hotel members can then see which BackBid users are coming to their area (based on the reservation that they already have) and can create a customized offer to entice the traveler to cancel their current reservation and rebook with them. BackBid bookings are done directly through the site, but cancellations must be handled directly by the traveler.
 
What does this mean for you, the hotelier?
The industry is divided on their opinions about the site. Some hoteliers believe that the site is creating a race to the bottom (in terms of price) and will create opportunities for hotels to steal other property's business. On the flip side, some hoteliers find the site useful for selling rooms in slow periods or during the last minute booking window. Unlike other OTAs, BackBid allows the hotel to take control over the number of bookings they receive, and therefore, greater control over their revenues.
 
We tend to agree with the second set of hoteliers because, if BackBid is used properly, it can offer valuable benefits for a hotel. The most beneficial feature of the site is that hotels can choose to offer value-added services, instead of discounting (which removes the race to the bottom concern). This allows a property to entice new customers for less money than a straight discount. Overall, we don't believe that BackBid should be the entire basis of a property's pricing strategy, but it has the potential to be a great tool for selling unsold inventory on a case-by-case basis.
 
Airbnb
According to the website, Airbnb is "a trusted community marketplace for people to list, discover, and book unique accommodations around the world  - online or from a mobile phone. Whether an apartment for a night, a castle for a week, or a villa for a month, Airbnb connects people to unique travel experiences, at any price point, in more than 33,000 cities and 192 countries."
 
The site is essentially a Craigslist for hotels. Individuals or vacation rental companies can list their room, apartment, boat, castle, etc. for rent. Travelers can book and pay online and will be vetted to ensure that they are trustworthy. Unlike the OTAs, Airbnb does not require rate parity so the owners can list the property at any rate they choose and can offer discounts on a case-by-case basis to incentivize bookings.   
 
What does this mean for you, the hotelier?
This site poses a big threat to hotels' revenues. As there is much less overhead for an individual who is renting out their space (than a hotel), the prices available through Airbnb are often drastically lower than the average hotel price in a given destination. In peak times, hotels often sell out, but Airbnd will often still have inventory available because of the sheer number (of properties) and the many different types of accommodations available through the site.
 
While AirBnB caters to a different demographic than most hotels, the website has gained a lot of traction since its launch in 2008. If it becomes popular enough, it could potentially expand its content to offer hotels and resorts, adding a new source of revenue to their existing electronic sales segment.
 
Tingo
The site's website says that "Tingo is the only site that automatically rebooks you at the lower rate if your hotel drops its price and then automatically refunds the difference to your credit card. All without you lifting a finger!"
 
Basically, a traveler can book their trip through the site and if the price drops at any time before departure, the site automatically rebooks the traveler at the same property for the lower price (and it will continue to do so, as long as the rate decreases).
 
What does this mean for you, the hotelier?
This site will have a drastic effect on hoteliers because it will automatically refund the difference if the room rate changes. In recent years, hoteliers have gotten used to lowering their rates at the last minute to clear inventory. But Tingo will further reduce the effectiveness of this strategy and will result in your property losing money. Instead of following traditional pricing strategies, Tingo forces hotels to offer the best price in advance and yield rates as the stay period approaches.
 
One thing is for sure. The online marketplace is constantly changing, with every year bringing more competition through many new channels. That also means that your revenue management strategy has to continue to evolve as the marketplace (and as consumer booking habits) change, and the only way to do that is a sophisticated, online revenue management system.

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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.