DistributionPosted by Oliver Geldner Sep 12, 2016 14:24:35
OTAs, metasearch, wholesalers and traditional travel agencies
can be an important part of the mix, but they are no match for booking
Following the launch of book direct campaigns by a few of the major
hotel brands, some articles have surfaced with unsubstantiated
information questioning the value of the business through direct
channels. Hospitality Upgrade sought the guidance of an industry expert to find out what the industry data actually shows.
Kalibri Labs, a Rockville, Md. based big data firm maintains a
growing database from more than 25,000 hotels and tracks all bookings,
revenues and customer acquisition costs with a history back to 2011.
Based on analysis provided by Kalibri Labs, direct hotel website
bookings continue to be significantly more profitable than OTA bookings.
The findings showed that direct bookings remain more profitable for the
hotel industry — to the tune of 9 percent — and when factoring in
ancillary spend, profitability can be almost 18 percent better. Costs
that are considered for this analysis include commissions, transaction
fees, loyalty fees, and any other direct channel costs.
On top of this, the acquisition costs for customers using direct
channels decrease over time while those for OTA customers remain steady
or may increase as commissions rise. Hotels essentially pay the same
commissions every time a guest comes through an OTA; there is no
reduction in cost when volume increases or guests come back. In
contrast, as loyalty rosters grow, the overall marketing costs are
reduced and the entire system becomes more efficient. The added
advantage of direct engagement leads to improved relationships with
The other factor regarding the OTA channel is that the presumed
“billboard effect” benefit, touted by third parties to justify the high
commission cost of their channels, has been shown to be a myth. The Online Travel Shopper’s Journey study published by the AH&LA Consumer Innovation Forum (to be released in June 2016 as Part I of Demystifying the Digital Marketplace: Spotlight on the Hospitality Industry) will
explore this in detail, but the key finding from the 2015 study is that
there is only a slight likelihood (7 percent) that a consumer will
visit an OTA and then return to the hotel website to book.
Further to this, early research by Kalibri Labs following the book
direct initiatives reveals that when OTAs have “dimmed” hotels by
removing photos and other content to de-emphasize their visibility, the
hotel demand shifted to other channels, mainly direct ones, suggesting
that the amount of incremental business through OTAs may be in fact less
than originally thought. This raises the question of the value of
paying a premium in commissions for business that will come anyway
through other channels. In examining trade-offs more closely on the
hotel side, Kalibri Labs reported, the higher net ADR suggests that
although some loyalty guests who had previously paid full rates are
taking advantage of the discounts, many are not. This metric will be
carefully tracked as the campaigns are more fully deployed but this
preliminary finding implies that the book direct programs may be
shifting new customers into the loyalty programs rather than simply
seeing trade-down pricing from existing customers.
Kalibri Labs advises that third-party business from OTAs,
metasearch, wholesalers and traditional travel agencies can be an
important part of the mix, but their report summarizes: striking the
optimal balance between direct and indirect business sources will
ultimately result in a hotel enjoying higher profit contribution,
delivering better consumer experiences through higher levels of guest
engagement, and yielding healthier economics for a hotel as a result of a
diverse business base.
Article published by Hotelonline, May 23, 2016
DistributionPosted by Oliver Geldner Sep 12, 2016 14:20:10
Just last, week The British House of Lords has joined the rank of
countries such as Germany, Italy, France and Sweden in the battle for
improved rate transparency, as it decided to launch an investigation on
anti-competitive practices in the online travel market with focus on
rate parity and ranking search results on OTA-sites.
In light of the changes in rate parity regulations that occurred
during 2015 and the expected continuation of this development in 2016, Taktikon recently held a series of Forums in Copenhagen, Gothenburg and
Stockholm to shed some light on the developments and analyze the impact
rate parity will have on pricing and distribution. Our guest speakers
came from OTAinsight, Bookingsuite and Triptease to share their data and expertise on the issue.
When looking at the emergence of OTAs and the entailing rate parity
clauses, it is vital to understand that 10 - 15 years ago hotels were
all in favour of the OTA business model as a means to earn extra
revenues during low occupancy periods. What happened during the years of
growth of these platforms, was that OTAs became experts in marketing
their sites, generating traffic and above all converting visitors to
bookers. OTAs use data driven decisions to adjust their user interface
and booking processes to make the purchase easy for customers, and as
long as they have both inventory and parity rates from their hotel
partners, the OTAs are happy.
According to OTAinsight,
Rate parity is beneficial for both the hotel and the OTA in markets
where the hotel does not advertise or market directly, especially in
view of the dilemma that Wholesale-sites as Amoma are prone to undercut
both OTAs and the hotel’s own website rates (in certain countries up to
40% of the search incidents when going through Metasearch). So, when
speaking parity, breaches occur not only between OTAs and the hotel web,
and hotels therefore also have to evaluate the number and quality of
As alternative to maintaining rate parity, hotels in the USA and in
Europe have introduced “member only rates”, where customers are enticed
to book on the hotel’s booking site at a 5-15% discount when using a
simple registration process. Hilton Hotels “stop klicking around”-
campaign is using member only rates as a means to convince customers to
stay on their booking site.
This trend has resulted in an interesting push back from the OTA
sites, where hotels have lost visibility in ranking of the search
results by being pushed to lower ranking slots. In other documented
cases, the hotel’s images, descriptions and reviews have been removed
from the search results, leaving only the hotel name and its rate on
display. Hotels therefore need to be mindful of the consequences in
offering lower rates on their website, be it “member rates” or discounts
on limited room types or periods, as ranking or display penalties might
be a consequence.
Another interesting development has been observed by rate transparency provider Triptease,
namely that OTAs have been observed undercutting parity, if only by
smaller margins. The causes for this were often relayed to testing,
currency exchange rates, taxation levels, as well as poor extranet
management by the hotels. This fact highlights the relevance of refined
rate update software and interfaces allowing for consistency in the
rates distributed by the hotel.
But it also underscores that OTAs
will test and tweak rate displays to keep the customer on their page to
complete the booking transaction, as the OTAs objective is to follow the
customer journey from the first search instance to the final purchase
in order to analyze buying behavior from A to Z.
In a recent study, Triptease found that 60% of customers prefer to book on the hotel website if the
rate differential to an OTA is less than 6 EUR, highlighting the
relevance of having a rate transparency widget on the hotel website,
showing the competing channel’s rates in relation to the hotel offer.
A third consequence of changing rate parity regulations is the
process of pricing hotel rooms not based on a rate grid or discounts,
but rather looking at market demand and business segments as a metric to
calculate the optimal price point. Data-centric pricing tools such as Bookingsuite can supply this information, thus enabling the conversion from static pricing into open and flexible pricing strategies.
With vanishing parity rules, hotels are in theory free to
distribute any rate they want in different channels. This focus on
steering rate distribution into the right channel for the hotel requires
increased rate transparency and is agreeably the biggest change on the
horizon. In consequence, hotels can expect a shift in the business share
received from OTA’s directly to Metasearch sites who act as aggregators
for different booking channels.
More differentiated rates in
existing distribution channels will shift consumers away from the “best
rate” promise every site guarantees these days to smarter search tools
covering all rate offers available.
Pricing competition will
continue to be a key driver of booking conversions and thus a greater
level of elasticity in pricing is going to be required from hotels.
The question is not IF this will happen and when, but rather how well
hotels are equipped for this switch of the status quo which is already
well underway to create a new business reality.
OrganizationPosted by Annemarie Gubanski Jun 23, 2015 11:35:12
A Revenue Management Outsourcing program can mean so much more than just outsourcing, it should always give you a long term solution.
A proper outsourcing program should not only mean that you hire an expert in Revenue- and Distribution Management, you also hire a mentor; someone to interact and be creative with. An external Revenue Manager might also give you a different view to your usual routines and commercial actions. Your situation will be seen with fresh and objective eyes that might bring new opportunities.
Another important benefit of a well working Revenue Management outsourcing program is that it gives you a chance to understand how you can increase your profit margin and be able to take over the Revenue- and Distribution Management function in the future.
As each property is unique, Outsourcing programs mostly are individually adapted to the individual goals and needs of the customer. The services Taktikon offers are various starting from Light (around 10-15 hours per month) to Full Revenue Outsourcing (around 20-25 hours per week) with a duration of a few months to a few years. Whatever the level or duration, we always aim to increase the level of knowledge so that our clients are able to stand on their own Revenue Feet in the future.
When a Revenue Outsourcing Program is tailor made, it is ideal for a broad kind of properties; individual hotels as well as mid sized chains, for organisations that would like to start with Revenue Management and Distribution/E-Commerce as well as hotels or resorts that do have a Revenue- and Distribution team in place but would like to have a mentor or are without a Revenue Manager for a period of time.
In our opinion, programs should start with a full Revenue Audit, which forms the basis of outsourcing services. An audit is aimed to find the revenue opportunities within each company and should result in a report with clear action points so that properties can start working together with their Revenue Expert. In the Audit that Taktikon performs, we focus to achieve the optimal Marketing Mix, Distribution Strategies, Rate Structure and Revenue Organisation. Our Outsourcing Program is aimed to help hoteliers implement our findings and achieve an improved profit margin.
DistributionPosted by Annemarie Gubanski Jun 16, 2014 10:00:53
The Rise of the Metasearch
Metasearch Sites are the
fastest growing distribution channels of todays travel industry. A study by PhoCusWright
from december 2013 shows that 36% of the holiday planners now are using
metasearch sites to book their holiday. During the HSMAI event in London
february 2014, there was talk that Metasearch sites twere behind 20% of all web
reservations in London and Berlin. There is no doubt that Metasearch will
continue to grow.
Metasearches can help to cut our commissions that otherwise would
be paid to the distribution channels and lead guests straight to the hotel
website. This can mean that the hospitality industry that is struggeling with
increased commission fees, can take advantage and drive traffic to their
website. The question is; Are you ready?
What is Metasearch?
Metasearch sites are so called “hybrid” websites that
compare rates and availability from different sources, making them very popular
with consumers. Sites shown on the Metasearches are mainly OTA’s, some of which
get their availability and rates through the Wholesalers. Examples of
Metasearch Sites are Google Hotel Finder, Trivago, TripAdvisor and Kayak.
Many of the large online
travel companies are currently investing heavily in advertising on Metasearch
to increase production and revenue. Recent events are
TripAdvisor launching a hotel metasearch, Expedia becoming majority stakeholder
to the German Metasearch leader Trivago and Priceline acquiring Kayak Software,
which accounts for 90% for domestic airlines' Metasearch traffic.
Can you take advantage of
You can make sure that your
Brand Website appears on the Metasearch Sites and this way get the opportunity
to gain market share from the OTA’s. In order for your website to appear on
these sites, you will need to fix connection and advertisement. The several
Metasearch Sites work in different ways but most Meatsearch works on a
cost-per-click (CPC) basis. Furthermore, the Metasearches promote the lowest
selling rate, which means that you will need to keep a very close eye on which
rates you sell at your site in comparison to the OTA’s.
Make Metasearch part of your
Metasearch development means
that there is a huge potential for the hospitality industry to increase direct
bookings to the Hotel Websites directly. Make Metasearch part of your Marketing
and E-Commerce Strategy and increase your chance to decrease commission fees!
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OrganizationPosted by Annemarie Gubanski May 22, 2014 14:16:13
The future Revenue Management Organization
The increasing importance from Social Media as well
as the move towards Total Revenue
Management and Profit Management has an
effect on the organization. In the near
future we will see that the different departments will work more closely
Having an effective Revenue
Management oriented organization will be more vital than ever. In this article
I will try to highlight which effects are behind the necessity to work more
closely together and what impact it has on your organization.
The Social Media effect
Social Media was, from the beginning, seen as “the thing
for the Marketing people”. Fortunately, organizations are now acknowledging the
effect it has on the entire
A study that Micros published
in april 2013 showed that a high position on TripAdvisor can lead to an
increased amount of reservations through the hotels website. Cornell published
in november 2012 a study on The Impact of Social Media on Lodging Performance where
they stated that a hotel can increase their price by 11,2% and still maintain
MPI if it increases its review scores by 1 point on a 5-point scale. This is confirmed
by Expedia, who find that “good reviews of 4.0 or 5.0 generate more than double
the conversion of a review of 1.0 – 2.9.”
Social Media can help increase both occupancy and rate. This means that these
media are important tools for the hotel industry and for Revenue Management in
order to increase result. And what are our guests talking about? Apart from the
size of the room and location of the property, the comments mainly involve
Operations oriented issues, such as cleanliness, friendliness, quality of food,
etc. This means that one of the most important marketing channels; Social
Media, actually is influenced by your operational departments. The better they
function, the higher the rate and better the chance you get to increase your
are moving towards a more individualized world, certainly helped with the
increase of Social Media. We are so used to being talked to individually on the
net, that we no longer are attracted by marketing campaigns directed to a
broader group. We want to feel like a company is talking to us directly. This forces
us to have a different approach towards our Market Segmentation. In a more
individualized world, we can no longer group our market segmentation mainly
depending on booking pattern and rate impact. We need to work with segments
that enable us to send individualized marketing campaigns to our clients. You
can read more about this in my earlier blog regarding Client segmentation.
Social Media has an immediate impact on our result as it has a positive effect
on both rate and number of reservations. Furthermore, they are excellent
channels that enable us to talk to our guests individually. The departments
that ensure an increase can be achieved are the Operations Departments, the
departments handling Social Media and the departments handling the brand
The Total Revenue Management effect
A clear trend within Revenue Management is the step
towards Total Revenue Management. This means that we are no longer “only”
focusing on Room- and/or Conference Revenue Management but apply this on all
revenue increasing departments, such as F&B outlets, minibar, spa, parking,
Applying Revenue Management on different
departments is interesting, as each department has its conditions to take into
account. The Time factor is different on Room Revenue as it is on most of the
other departments, as hotel rooms usually are booked per night, whereas the
other departments can face multiple requests that can differ from a few hours
to a few days. Menu Engineering is frequently used within Spa- and Restaurant
Revenue Management and is an excellent tool that enables properties to maximize
profit. I will write more on that in a later blog.
Smart scheduling can help optimize the use of the
spa facilities, as Smart Menus are used to attract the highest-margined dishes.
At its turn, all departments have the possibility to create highly commercial
packages and can calculate which impact the different package elements should
have on the different departments in order to create the optimized result.
This means that, besides increased knowledge in
Total Revenue Management, an organization needs to establish Who Does What and
have a close look into the different job descriptions and commission schemes for
the individual departments in order to make sure that all departments are
willing to work together to get the best total result for the property.
The Profit Management effect
With the move to Total Revenue Management, we see a
further swift towards Profit Management. This means that we not only look at
the revenue generated by the different departments, but even at the different
margins from each reservation. This involves both flexible and fixed cost such
as distribution, labor, rent, cleaning, purchasing, travel expenses and
This means that we will need to have a different
approach when it comes to mapping the different financial department codes
towards the revenue streams. Finance will need to have an increased cooperation
with the Revenue Management department in order to get the best picture. If
done right, we are able to calculate the exact net impact per reservation type
or market segment and with this obtain the best profit possible.
Are you ready for the future?
All commercial departments, operational departments
and Finance will be working together more closely in the future and if done
right, properties have the possibility to increase their net result
drastically. The question is; are you ready for the future?
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Revenue ManagementPosted by Annemarie Gubanski Apr 28, 2014 07:44:50
Rethinking Market Segmentation
Market Segmentation has always
been one of the most powerful tools to identify which client groups to target
during which periods. By understanding which segments have the most impact on
your result, strategic decisions can be made in when, where and how to target
your customer groups. Traditionally, segmentation is chosen by:
clients, for instance corporate- and leisure individuals or corporate- and
Rate Products, for instance negotiated-, public-, meeting-, spa- or campaign
Channel, for instance Merchant, Retail, GDS, Brand Website
Revenue, for instance meetings, F&B, Spa, Minibar
which country or region
pace, when do these customers book and where
In an individualized world,
adapting your communication as well as your offers and products towards your
individual customer is more vital than it ever has been. As all individual
guests have individual needs, hotels see themselves forced to rethink the way
they set up their segmentation and go over to Customer Segmentation, which not
only diverts type of customer but places them in groups depending on their
Customer Segmentation in
Applying customer segmentation means that you will have to start understanding
the needs of customers and what makes them decide between one offer and
another. When you know this, you can start to form groups of customers who
share the same or very similar values. This enables your property to determine
which groups of customers are best suited for which product and service.
Traditionally your corporate
customers like efficiency. Furthermore, they care about their expence bill but
quite often would like to compensate themselves for spending a night away from
home for business purposes. The offers they might like to see from you can
check-in and check-out
credits, drink vouchers
Your leisure guests however
might appreciate anything that makes their stay more memorable. They could be
checkin and late checkout
At it’s turn, each market
segmentation consists of different groups that have different needs and
different booking patterns. Why keep them whithin one group? For instance;
leisure individuals can consist of both couples and families, though their
needs and booking pace is completely different. Furthermore, you would need to
keep in mind that corporate customers might come back to your property for
leisure purposes and your leisure guests might partly be using their leisure
trip working. This means that different offers might apply on different
occasions and a specific guest might fall into several segments.
This is not a new way of
segmenting your business. It can be seen as a sign to what is happening within
the business at the moment; a much closer internal communication where
departments work more closely together. Social Media has from the beginning
been seen as a “Thing for the Marketing Department” but has an increasing
influence on Revenue Management as positive ratings can influence our pricing
when potential guests might be willing to pay a bit more if they see that we
outperform our competitors. What is written on Social Media mostly relates to
the operational departments. This means that these departments have an
increasing influence on pricing. This means that we no longer can look at our
business consisting of different departments working together on their
individual goals. I will write more on the changes in the organizational
schedule in my next blog.
Rethinking in Practice
Your customers are already
telling you what they would like you to offer. Social Media is a source of
the comments your guests have regarding your facilities and services. This does
include the services and facilities they are lacking
your guests. Ask them what they are interested in and how they would like to
see your property in the future. What services and facilities do they
which services/facilities you might want to add or change and group the different services/facilities.
Now group the
customers that share the same interests and values. Adapt your marketing
communication to their needs.
Most likely you will find that
you would need to devide your segmentation in different segment groups and you
will need to look into the handling of your guest profiles. As more detailed
information per customer is stored on your profiles and this information is
used for marketing purposes, duplicate profiles can cause even more challenges
in the future.
External help always makes it easier to Think
Outside The Box (don’t you also hate that expression?) as they have a
possibility to view your property from the outside in they can offer you a new
level of looking at your own business. Taktikon, as a number of other experts
in Revenue Management, does offer a number of services that might help you
increase your result. If you would like to contact me, you can do so by tel: +46
(0)73 9044 222 or +31 (0)6 55 81 00 86, or send me an email at: email@example.com
and tell me what you would need help with. I would gladly like to see if I could
help you. When in doubt, you can always visit my website for more information: www.taktikon.com
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OrganizationPosted by Annemarie Gubanski Mar 01, 2014 13:22:01
The Power of Giving Compliments
In my neighborhood lives a man I have given the
somewhat non-original name; Compliments Man. It has happened to me a few times;
when he meets me on the street, he comes up to me, looks me in the eye and
says; “I just want to tell you, you look great”. I am far from exclusive, as
most days he just walks straight past me and goes to another girl, looks her in
the eye and says something. I know he tells her the same thing, as the reaction
is exactly the same as the way I react. A big smile. A happy face. I must admit
that I feel just a bit better and happier, the days I meet Compliments Man.
This reminds me about World Compliment Day, which
is a non-commercial initiative, held on the 1st of March every year.
From a commercial perspective; giving compliments
is about the best way to keep your staff and colleagues motivated and loyal. Showing
appreciation actually is far better and has a longer lasting effect than pay
raises, as these tend to be best only the first month. And why stop at the
working space? When was the last time you gave any of your friends and family a
spontaneous compliment? Think about how good it feels to receive one. Then
think about how great it feels to give one.
Support Compliment Day and give at least one
earnest compliment to any one of your friends, family, colleagues or innocent
by passers. I promise you that both parties will feel a lot better the whole
day. And with that said; why stop at Compliments Day? There are 365 days in a
year, you know?
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Revenue ManagementPosted by Annemarie Gubanski Feb 11, 2014 14:04:07
Total Revenue Management, the future
Kimes conducted a study in 2010 regarding the future of Revenue Management,
which concluded that “In the future, Hotel Revenue Management would be more
strategic in nature, would be more technology-enabled and that it would
encompass all parts of the hotel. The respondents identified function space and
restaurants as the most likely candidates for future applications of Revenue
Management”. I agree with this point of view; a good way to make sure to
achieve the optimal result is to focus on all departments that create Revenue. This
conclusion is also strengthened by the survey that HSMAI recently conducted and
which was presented by Carl Oldsberg during the HSMAI conference in London on
the 6th of February 2014.
hotels and hotel chains are starting to extend the responsibility of Revenue Management
to the Function Spaces. However; there is no massive movement in applying
Revenue Management to other departments such as; Restaurants, Minibars, Spa,
Shops, etc. This might be so because these departments are considered to be a
service and a loss or Break Even is therewith acceptable. Basically properties
are missing out on a potential growth of 30% per department.
The Six C’s in Revenue Management on
we talked about 4 C’s (Capacity, Calendar, Clock, Cost) with a fifth binding factor;
Customer. The sixth factor increases in importance; Channel.
There are many similarities to
the "traditional" Room Revenue Management, conducted by most hotels,
though the time factor is even more important when it comes to Conference-, Spa-
and Restaurant Revenue Management, as these facilities can be rented by the
hour, part of day or whole day. Also Space Management is an important factor to
keep in mind as many times space, such as swimming pools and floor space, can
be limited compared to, for instance, the treatment- and hotel rooms available.
Calendar: Calculating Total Demand is a vital parameter in
determining the right price. On the same day and time, the demand may vary from
department to department, which might be challenging, but can mainly be seen as
a great opportunity to achieve the optimal effect, as all departments can benefit
from each other and pricing can be adapted strategically. This does mean that
the various departments should be able to co-operate well and trust each
your booking pattern, such as time of booking, expected length of stay and the
pick-up levels that can be expected are also important factors to calculate Total
Demand. When applying Revenue Management on Conference, understanding your
customers booking pattern is one of the most important parameters in
determining the probability to expect the most profitable requests and which
requests to say No to.
sale comes with a cost. This does not only concern Cost Of Sale on your
distribution channels, but even operational- and personnel costs. How do we
relate cost towards revenue and achieve the best margins on all departments? Do
we work with Dynamic Rates and how do we sell this practically? How does Menu Engineering work and how can we use
this tool to increase profitability?
Customer: How do we define the optimal Marketing Mix and what is the Total
Revenue per Market Segment? Do we need to break this down to Customer Level in
order to be able to offer customer adapted packages? How can we make sure we
know the Total Margin per Segment and how do we make sure we can offer
availability to our most loyal and profitable customer? Furthermore, how do we
find the systems that support us in these questions?
factor is increasingly important. Which channels do our customers use and which
customers do we need to attract in order to find new markets and new
possibilities? How do we make sure we can find the packages our customers want
to buy and to which rate? Furthermore, what are the possibilities the different
channels create to offer packages and which channels are best adapted to our
Opportunities in the implementation process
are basically three main challenges, that all are related:
Organization: There usually is a fear
factor involved; department heads can be unsure if they will be able to handle
an increased responsibility on an already overloaded schedule or might be
afraid to delegate a certain responsibility to somebody else. It is not always
easy to have a person from a different department determining which rates to
sell to. Trust is an important factor and it is vital to know all involved know
what to do in order to increase result. This leads directly to the second
Knowledge: Not only training
is of an essence; staff members from all departments will have to be aware of
the implications on their daily tasks. In many cases, a Revenue Management
project on a property starts with making sure that all heads of department are
aware of the changes of the impact the implementation of Revenue Management will
have on their department. By the end of the day, all involved will achieve increased
knowledge and new challenges. With knowledge comes the demand for good
statistics and tools to analyze. This relates to the next challenge;
System Solutions: Where can we find
the Systems that help us know the Total Revenue per customer or per Market
Segment? Will we be able to offer the possibility to offer a booking engine
that enables our customers to book all our departments directly through our
website and are there any systems available, or being developed, that will help
us yield all Revenue generated?
Kimes article on Total Revenue Management: http://hotelexecutive.com/business_review/3620/total-hotel-revenue-management
Survey: RM%20succession%20planning_1.pdf (attached)
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Download HSMAI's Survey