from Landmark Agreement; Manage Discounted Rooms
Through Central Res Systems at No Cost
|Calgary, Alberta, Canada — May 14, 2003 —
VIP International Corporation, a channel marketing provider committed to
driving more revenue for hotels, today announced an agreement, effective
May 1st, with Travelweb LLC that eliminates transaction costs for VIP clients
who deliver discounted inventories through Travelweb’s distribution network.
Travelweb enables the hotelier to manage yield and revenue strategies through
its automated merchant model that delivers real-time discounted rooms from
the property’s own system.
"Hotels have been asking for an Internet booking system that allows them to book rooms through their central reservation systems without having transaction fees attached. This agreement leads the industry in answering that request," said Kelly Blake, president and CEO of VIP International, who noted 10% of the company’s 1,550 properties already participate in Travelweb. "Now that transaction costs have been eliminated, we expect other hotels will want to participate."
Blake cited several benefits VIP International clients realize from managing discounted – or net rate - rooms through a hotel’s central reservation system. Those include greater efficiencies through the ability to enact yield management using familiar tools; a single point of entry for all distribution channels; centralized production reporting and reservation delivery for every channel; and a dedicated revenue management team at VIP International to help properties maximize each reservation channel. He defined ‘merchant model’ as: when a hotel supplies a discounted rate that is usually 20% to 30% off the retail rate to a third party travel site like Travelweb; the third party company then marks up the rooms for resale at a price generally near retail. The controversial practice serves a purpose, says Blake. "Merchant models are not meant to sell all of a hotel’s inventory, but they help broaden distribution and fuel occupancy. We advocate a mix of selling through Global Distribution Services (GDS), consortia, a hotel’s own web site, call centers, and merchant models."
Bradford Homesuites Experiences 188% and 137% Increases in Orbitz Bookings and Revenue
This advice has proved profitable for Addison, Texas-based Bradford Homesuites, which uses all VIP’s available channels including Global Distribution Systems, 1-800 voice center, consortia, and web site real-time reservation services to book rooms. The hotels, owned by Intervest Companies, starting using Orbitz 18 months ago, and Travelweb in January 2003 through VIP. With Travelweb, they realized 188% and 137% increases in Orbitz bookings and revenue, respectively, quarter-over-quarter in 1Q ’03 and 4Q ’02. Orbitz is a travel site owned by the world’s leading airlines, and a Travelweb distribution affiliate. "I make decisions several times a week on the net rate programs for Bradford Homesuites, and it is much easier to manage when I only have to go through one yield management system instead of through several extranets. Having no transaction fees will make us more competitive and more profitable," said Michelle Tokarczyk, director of revenue management, who also noted that the management resources required to profitably participate in net rate programs outpaced the company’s internal resources. The nine extended stay Bradford Homesuites realized an average 104 percent increase year-over-year in rooms booked last year after switching to VIP.
Executive Hotels and Resorts Doubles Bookings, Protects Higher Rate
Another good example of how the merchant model can increase incremental business is Executive Hotels & Resorts, a newcomer to Travelweb distribution. Executive Hotels & Resorts is a chain of boutique and plaza hotels with 15 locations in British Columbia, Alberta, Washington State, and California, and is managed by publicly traded Executive Inn Group Corporation [TSX: EIG] based in Vancouver, British Columbia. Executive hotels were already publishing retail rates on Orbitz.com, and receiving a healthy number of bookings per month. However, the first two months select hotels participated in Travelweb, they received an additional 100% more room bookings, without eroding the higher published rates.
"Hoteliers desperate to fill empty rooms need to get revenue, not just through discounted sites, but through every channel on the Internet," said VIP’s Blake. "We must all play an active role in changing today’s merchant model into a supplier-friendly way to distribute inventory online. This agreement signals a shift in the industry towards what is in the best interest of the hotels: a cost efficient way to manage discounted room inventory through the central reservation systems."
About Travelweb LLC
Vice President, Sales
VIP International Corp.
|Also See||Interstate Hotels & Resorts Signs Five-Year Agreement with VIP International to Outsource Call Center; Expects to Pass Along 8 Percent to 10 Percent Savings, Increased Revenue to Hotels / April 2003|
|Hong Kong’s Largest Hotel Operator Sees Reservation Numbers Jump 26 Percent In First 10 Months of 2002, Increases Global Presence with New Reservation Sales Provider / February 2003|
|Canadian North Chooses Calgary-based VIP International to Provide Voice Reservation and Support services / January 2003|
|Midwestern Chain Targets Value-Conscious Senior Market; Picks New Channel Marketing Provider to Power Goal of 100% Increase in Bookings / January 2003|
|Midwestern Management Firm Gains 69% Increase in GDS Reservations YTD at 12 ‘Enhanced Limited-Service’ Properties / Dec 2002|
|Texas-Based Hotel Chain Captures 104% More GDS Reservations YTD, Speeds Ahead of Economy / Dec 2002|
|Four Star Calgary Hotel Reports 42% Increase in Bookings During Initial Period With New Channel Marketing Provider / Nov 2002|