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to Beat the Intermediaries at Their Own Game! |
By Max Starkov and Jason Price, July 2003
The catch phrase �Lowest Price Guarantee� is an age-old marketing tool widely used in retail since ancient times. Even before the Romans knew how to conquer merchants were selling their wares in bazaars and marketplaces drawing in buyers with a lowest price guarantee. Fast forward to present day and some of the most successful retail companies in the US tout the lowest price guarantee. The strategy has worked effectively from the corner boutique to behemoth Wal-Mart, and continues to serve as a standard marketing tool. Why have hoteliers been slow to adopt a policy on lowest price guarantee? How can hoteliers institute such a policy without interfering or alienating its prime distribution channels? What is the applicability of the lowest price guarantee in hospitality? Background Lowest price guarantee is a pact between buyer and seller that the price tendered is the mandated lowest price available for the item. It is an assurance; hence guarantee that the specific item for sale is the lowest possible price available on the market. With the success of Wal-Mart operating across the US, such assurances work as buyers keep coming back. The Internet has become a great incentive for people to search and book travel online. Practically full information is available with a key stroke and since 9/11 many US travelers have become convinced that the best travel deals can be found on the Web, partially due to the very concerted promotional efforts by the airlines and online discounters. Lower prices and �assurance of lower prices� are cited as two of the main factors that would influence people to book online. Online intermediaries, quick to realize the huge potential of this marketing tool, began instituting lowest price policies as early as the mid 1990s. Namely, Hotels.com practically "invented" the lowest price guarantee in the online hospitality marketplace and has been using it successfully for over 5 years now. Undoubtedly, it is one of the main reasons for its success. The opaque services Priceline and Hotwire launched similar guarantees but while Priceline stands by its "Best-Price-Guarantee", Hotwire goes a step further by promoting a �Double the Difference Price Guarantee�, if, within 48 hours of booking, the customer finds a lower price for the entire stay for an equivalent room type in the same hotel on the same dates. Why hoteliers are late to the game remains a mystery but fortunately a few brands have begun fighting back. InterContinental Hotels Group, Starwood and Cendant introduced their own versions of lowest price guarantees in May and June of 2002 and Accor followed suit in March of 2003. A Powerful Tool to Boost Direct Online Distribution The lowest price guarantee is applicable to every hospitality business model from corporate brand to hotel management company to the independent corner hotel. The lowest price guarantee is one of the most potent techniques hoteliers have at their disposal to boost direct-to-consumer online distribution. Used wisely such a tool can play an important psychological and promotional role in online distribution. Hoteliers benefit by offering the lowest price guarantee:
The following two key considerations clearly support the importance of the lowest price guarantee:
Here is how US travelers respond to the question �Which of the following
would influence you to book, or book more, online?�
Many surveys show that online customers prefer dealing directly with the travel suppliers, including hotels, when purchasing travel online. Here is how online US leisure travelers respond to the question "If you knew that the price of travel would be the same, who would you prefer to buy travel from?"
Case Study: InterContinental Hotels Group
Take note independent hotels, resorts, casinos, hotel management companies, and franchised hotels with a stand-alone website, implement your own lowest price guarantee. Turn to an experienced eBusiness hospitality consultancy that can help you conceptualize and implement your own lowest price guarantee that is, a) appealing to the travel consumer, and b) easy to implement and manage, thus boosting your direct-to-consumer distribution, website conversion rates, and Internet revenues. Conclusion The direct-to-consumer model should become the foundation, the centerpiece of any hotel company's online distribution strategy. The direct-to-consumer model provides the hotel with long-term competitive advantages and lessens dependence on intermediaries, discounters and traditional channels nearing obsolescence. The Lowest Price Guarantee is one of many important components that serve as the underpinning of the hotelier�s robust Direct Online Distribution Strategy. HeBS provides a kit for hoteliers to implement, institutionalize, and safeguard your own Lowest Price Guarantee. Copyright @ 2003 HeBS
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Also See | Brand Erosion, or How Not to Market Your Hotel on the Web / Critical Online Distribution Issues Revisited a Year Later / Max Starkov / June 2003 |
In Search of the Internet Intelligence Report That Makes Sense - Growing online distribution drives demand for new intelligence tools / Max Starkov and Jason Price / January 2003 | |
Hotelier�s 2003 Top Ten Internet Resolutions / Max Starkov and Jason Price / January 2003 | |
The Internet: Hotelier's Best Ally or Worst Enemy? What Went Wrong with Direct Web Distribution in Hospitality? / Max Starkov / October 2002 | |
Brand Erosion or How Not to Market Your Hotel on the Web / Max Starkov / April 2002 | |
Do You Know Where Your Hotel is in Cyberspace? / Max Starkov and Jason Price / Jan 2002 | |
Convention and Visitors Bureaus: Ten Action Steps To Soften the Impact / Max Starkov / Oct 2001 | |
How to Turn Lookers into Bookers- Recommendation Engines in Travel and Hospitality / Max Starkov / Aug 2001 |