Hotels and OTAs grapple with hyperactive consumers in an online space where speed is the key
Consumers more than ever want to have access to the whole distribution chain and make decisions in the click of a button, whilst variety entertains the restless browse for the right offer at the right price at the right moment. This has been increasingly facilitated by ‘price comparison sites’ or 'price aggregators'.
The search technology matrix has grown to cover all search parameters that consumers require to do a ‘like for like’ comparison. Hotel price aggregators are driving organic search facilitating access to thousands of hotels in just a few clicks.
As rate parity is a key factor in the pricing strategy of many hotels, there is not a big difference in rates; however wholesalers further enhance distribution of rates and inventory across a huge number of affiliated online agents. The affiliates have their own guidelines in marking up these rates, which creates the ground for many price comparison sites to assist consumers in their quest for the right offer.
Each qualified search is driven by a referral scheme which is paid out by the affiliate partners i.e. the underlying provider of the service. For the consumer - this is just a great deal as it saves them the headache of going through an extensive search process in their hunt for the best available rate!
Wholesalers and bed-banks have a key role in distribution as they provide net/gross rates to other online agents which are then picked up by price comparison engines attracting consumers wanting to use a one-stop-shop in their quest. Affiliates also pick up rates and inventory from the GDS to replenish inventory or diversify their portfolio of available hotels based on agreements with the global distribution systems.
Which price comparison sites do you use? When I search for these here in UK, I come across the following – hotelscombined, Trivago, travelsupermarket, secretescapes, hotelpricescanner amongst others.
For Hotels understanding the market place is key to implementing a healthy balanced pricing strategy to manage and maximize revenue in real-time.
Hoteliers whilst segmenting their markets need to consider both the consumer and the competition in order to capture the relevant data which combined with the overall business intelligence leverages the hotels' position in the market.
Identifying the right competitor set powers the heavy weighted function of the revenue management matrix. Being in a position to monitor the competitor set streamlines the inflow of business intelligence data and the real-time aspect of price intelligence is what provides the ultimate edge to a hotel in any market condition.
The evolution of tour operators from the brick and mortar shops of the 1990s into modern-day online travel agents (OTAs) has made the travel digital space an exacerbated playground where the fight for lowest rate guaranteed is critical whilst rate parity is still placed on a high pedestal keeping the hotels under constant scrutiny.
Changing times brings with it improved technology. With new problems come new solutions! Hoteliers can now gain access to real-time price intelligence for quicker reaction and greater control of the various shifts in the market place giving them a chance to dynamically optimize revenue.
The technology embedded in intuitive and user friendly applications allow hoteliers to generate qualified competitors 'rate shopping'. Selecting the right parameters enables fetching of relevant data where hoteliers can drill down into very specific ‘like for like’ comparison of room types, restricted /unrestricted rates, tax inclusive/exclusive rates with the search window available as far as 3 years in advance.
Real-time rate intelligence facilitates up-to-the-minute price optimization when integrating a rate shopper and channel management solution, enabling a live fix of rate parity discrepancies.
In the current scenario, keeping a close eye on parity across connected travel sites and making inventory available on third party distributors will set opportunities at channel level for an organic increase of ranking and visibility. This will bring the billboard effect into play thereby driving business to the hotel's own site and booking engine and generating direct revenue.
Further, it will also help hotels keep on top of market shifts with immediate rate change alerts which can capture specific rate variation - whether in value or percentage. This will help the hotel reposition itself in time and consider revenue maximization within the right parameters.
For hotel groups and chains, setting and monitoring pricing strategy might be difficult but technology is now available to notify the group of any breaches particularly when specific rate strategies are being compromised.
Selecting the right price comparison tool is critical as it gives hotels the relevant data to understand when money is left on the table! It's key to make like-for like comparisons whilst tax can be a determining factor as rates might be displayed tax inclusive or excluding tax, considering accuracy and completeness as a whole is essential. Failing to source the correct data will hugely impact the hotel’s pricing strategy.
Refining your rate strategy is symbiotic to the quality of your business intelligence data!
The Online Travel Agencies (OTAs), on the other hand, are in a constant clash – going by the rule of ‘survival of the fittest' ensuring they keep hunting for the 'best available rate'.
As the hyperactive consumer increasingly targets the price comparison sites to capture the best deals – this is what drives revenue to many OTAs today.
OTAs are bound to use similar price comparison systems or rate shopping tools, to enable the tracking of best available rates for listed hotels and benchmark those with their competitor sites i.e. other online travel agents selling the same or a similar service.
A corporate rate shopping tool can capture hundreds, if not thousands, of hotels worth of data, generating rate and availability alerts for granular to massive shifts in the market place i.e. when rates of hotels are increased or decreased in the sites or when availability is running low!
Such technologies efficiently flag discrepancies and potential breaches of agreements between hotels and online travel agencies.
The value of a rate shopping tool can easily be assessed based on its functionality, whether the tool can generate live data for greater edge and reaction time vs historical rates shopped in the past i.e. hours, days, months or even years ago.
The rate reports can be accessed in various formats - from a graphic representation for a bird’s eye view to detailed pivots and rate analytics.
Don't let competitors anticipate your pricing strategy, be dynamic and carefully consider all market segments whilst integrating business intelligence into your strategy!
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