By Yogeesh Chandra
December 2010

Hotel business faces pressures on all fronts. Customers expect the world in terms of service, competition watches you very closely and demands keep fluctuating. To add to that, there are visibility challenges on the internet and discounting & reference based leads end up affecting the margins on a consistent basis. All this while new competition keeps getting added in the city’s supply to further correct room rates and dent your occupancy.

There is also a visible shift that is occurring where traditional travel agents and referral hotel reservations are giving way to hotel’s own website and the ability to reach out to an ever growing number of OTAs that should be tapped into, through distribution service providers.

In this two part series, we are covering some vital business opportunities that will help your hotel stand out against your competition.

Part I: Increase your reach on and through the web by

1. Looking beyond traditional markets and sources of demand

To survive in this dynamic environment (Industry as well as the macroeconomic pressures), partnering with new sites to reach out to customers in new geographies (emerging markets for your city for example) is a logical solution to increase your visibility and revenue.

Market intelligence reports can be a good resource to keep an eye on which markets/countries have started giving business to your city and how well contracted are you with OTAs from that region.

Traditionally, reservation and revenue management resources dedicated to manage select few OTAs felt the constraint of managing all third party websites within limited time. Increasing resources may not have been a great idea as you were never sure if your new partners will start performing from day one but using a channel management solution is a suitable option.

2. Not putting all eggs in the same basket

Developing new income streams offers a strategic advantage to you over your competition while hedging your dependence on a small set of OTAs. Channel management solutions seem to provide the answer by helping you develop partnerships with new OTAs one doesn’t get to work with. In fact an established channel manager can be a good starting point to help you evaluate all the websites they work with and who you would like to partner with to increase your visibility and presence on the web.

You will witness the power of leverage by using the existing resources to manage far more number of OTAs. Since the subscription price beyond a certain number of OTAs remains unchanged, it offers you the opportunity to develop a long list of OTAs and use your presence on them to reach different geographies and demographics.

A simple example yields the fact that if you take your partnership portfolio from 20 to 40 (for which no extra startup fee or management effort is required) and even earn just one booking a month from your new websites you have now earned revenue that never existed for you that would not only go straight to your bottom line but also offer returns enough to pay for the channel management solution you have subscribed to (depending on the transaction value, calculated at an ADR of $200).

3. Enhancing the ‘billboard effect’

Once contracted with new OTA partners you should work closely with their market managers to improve your visibility on their sites.

It’s important to note that the billboard effect and word of mouth that will follow for your property will not only address the hoteliers drive to maximize visibility but will also generate revenues offline or through other channels.

It will thus help you bring the overall payout costs down through your new partners since they may not contract with them on high commission levels that the existing large OTAs in your space demand.

Managing electronic channels is not  rocket science but can be overwhelming for sure if channel management tools are not used or the ones being used are not up to mark. A hotel company typically faces three main issues with electronic distribution:

1. Rate and product parity issues.
2. Content parity issues.
3. Visibility issues
   

Since selling effectively through electronic channels as a process is still evolving, in part II of this series we will cover some basic pointers to enhance your visibility and also help you improve your ‘looker to booker’ ratio( L2B) on OTAs.

About the author
Yogeesh Chandra is a hotel revenue management specialist and has worked as Revenue Manager with Spencer on Byron Hotel Auckland in New Zealand and Taj and Leela Group in India. With over 11 years of industry experience, Yogeesh has also been associated with Intercontinental Hotel Group, SKYCITY Entertainment Limited and Millennium & Copthorne Hotels, New Zealand. He is currently AVP, Product Management at RateGain.