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Article by Niall Lenihan

How to Build & Analyse Successful Rate Plans

Net Affinity 16 June 2017
How do you design a successful rate plan for your hotel? Why are some rate plans more successful than others?When you create rate plans, try and tap into your inner hotel shopper psyche. Is your customer planning to visit your hotel for business, or pleasure? What are their expectations when they make their initial date search? When they're visiting your hotel website, what do the images they see on the homepage represent? What do your images and copy in the Bedrooms, Food and Beverage, Golf and Spa pages represent?Every rate plan has purpose. However, not every rate plan has a valid purpose. Is the rate plan there to, for example, keep your chef happy that you're promoting the restaurant, or is there a real financial value for the hotel in having it there?Below are 4 examples of the most profitable rate plans hotels typically offer, along with a breakdown of why they're valuable and how to use them.1. Room Only: Book Direct to Find the Best Available RateOffer a room only rate with a Best Rate Guarantee to your own website. In short, no matter the scenario, guarantee for guests that the best available rate for your hotel will always be when they book direct. Here's a study from Cornell that gets into the specifics of how customers prefer to see BAR displayed on your site.A word of warning: offering this rate plan to any third parties or other openly available sources opens up the opportunity for them to margin test your rate to secure a booking through their own website.Margin testing is when an OTA tests the margins of the rate you are providing them, usually by taking 2% - 4% off the rate and selling the rate cheaper online. The hotel will still receive the correct rate for the booking, but the OTA will have taken the hit in commission by 2% - 4%. This percentage won't concern them, as in most cases they are still making a further 12% and in some cases 15%. You can eliminate this risk by only offering "room only" rate plans directly on your official hotel website.2. Bed and Breakfast: Save EUR5.00 When You Book Your Stay with Breakfast OnlineBed and Breakfast rates are one step up from Room Only rates. They are the first opportunity to upsell your guests, so be creative! Be descriptive when you tell your guests what is included.Make sure to incentivise them to book Bed and Breakfast instead of Room Only. This can be achieved by potentially having a lower breakfast supplement online as part of the price differential between Room Only and Bed and Breakfast. For example, you might sell your breakfast as part of the package at only EUR10.00, instead of the in-hotel cost of EUR15.00. Make sure to let the guest know in the description what the saving is.Depending on your hotel's location - for example, city centre versus near the airport - the rate plan including breakfast and savings may be all the more important. Make sure you've got 'Breakfast' in the headline.3. One Night Escape: Dinner, Bed and Breakfast - Enjoy a Welcome Drink on Us.Every hotel wants guests in their restaurant. Guests in your restaurant also come with the potential of indirect revenue spend in the bar before or after their meal - but how do you evaluate this?There are two ways to look at it. A busy bar means other guests will come in. A good atmosphere at the start or end of their evening will attract some guests in for a nightcap, and secondly, it may attract walk in guests. Offering that free welcome drink gets people in for their first drink, and the savings may convince them to stay for a second.Why should a guest book the dinner package in your hotel, then? Again, it comes down to incentive.At this stage, consider reviewing your dinner supplement. What's the allocation the Food and Beverage department gets from a dinner package?Consider a guest who has stayed in your hotel previously and dined in the restaurant. They might remember that the early bird is EUR30.00 per person for a three course meal. Then, if the supplement is EUR60.00 on top of the Bed and Breakfast rate, they know they are paying the same rate they'd be paying if they walked into the restaurant.Offer a welcome drink as part of the package to your direct booker, or potentially a EUR20.00 Spa or Golf credit if that option is available to you.4. Advance Purchase: Pay Now and Save 10% - Exclusive Hotel Website OfferAdvanced purchase rate plans are, of course, an extremely popular rate plan across all hotels. However, there are certain aspects you must identify and focus on if you are offering this package, or planning to.If offering Room Only rate plans on all your distribution channels, try applying the Advance Purchase discount to the Room Only rate plan on your website. This reinforces the idea that guests can only secure the best rate guarantee by booking direct. If Room Only is only available on your own website, consider applying the Advance Purchase to the Bed and Breakfast Rate instead.What are your property's lead times for bookings? If you tend to get long lead bookings - 50+ days - have a minimum booking window of 60 days for an Advanced Purchase option. If it's shorter, e.g. 30 days, put in something more like a 7 day Advanced Purchase option.Alternatively, become a trend setter in your market and offer two options: a 15% discount for bookings 60+ days out, and 10% discount at 30 days.ConclusionRegardless of the type of rate plans you're creating, the name of the rate plan is paramount. Make it is as descriptive as possible. Remember, a lot of your guests are likely visiting your website via a mobile device, so the rate plan description may not be clear or as obvious as it is on desktop. Take a look at your analytics to find out how many visitors you get on mobile, and make sure you look at your rate plans on your phone so you know how they display.The rate plan names we've used above are strong messages for why a guest should book direct when searching for their next hotel stay. You should reinforce this message throughout all your online advertising, and even on your home page with a call-out box or a different feature to draw attention.
Article by Maeve Walls

Don't Be Afraid to Prioritize Direct Bookings Over OTA Bookings

Net Affinity 29 March 2017
For example, hotel technology provider Mirai recently published an article on the difficult coexistence between Booking.com and your hotel website.They assert that the goal for hotels and Booking.com - and other OTAs - should be a balance, but that the hotel needs to ultimately take control of their inventory.In recent years, Mirai say, the "marriage" between Booking.com and a hotel has turned into something more one-sided, and hotels are waving the flag for freedom.As the OTA business grew more powerful in recent years, Booking.com and other online channels often captured large shares and charged commissions that are far too high to be beneficial to independent hotels. These high distribution costs meant that hotels made less profit despite a higher income.The Book Direct MovementThese high fees and increasing OTA strength sparked the book direct movement. The book direct movement is a determination for hotels to drive direct bookings at a lower cost per acquisition - lower than OTA costs, at the very least.It's important to note that no one is suggesting hotels throw the baby out with the bathwater. OTA's do provide essential exposure (especially for independent hotels), and they help fill low periods.Mirai describes this struggle to drive direct bookings as the 'conflict zone'. Since hotels are now competing with OTAs for bookings, they must limit the inventory they give to OTAs, break parity in prices (where possible), and fight for attention on paid search.This has caused some strife, from Expedia's 'dimming' of hotels to Booking.com's legal struggles over price parity.The Productivity Zone for Direct BookingsFrom all this evidence, it does seem like 'conflict zone' is the appropriate term.However, although it could be called a conflict zone, this area is in fact when the hotel is at its most productive. So, we'd like to propose calling it the Productivity Zone - conflict is simply one part of the picture.Although one of the necessary implications of the proactive book direct actions is conflict with OTA's, conflict is not the core reason for the action the hotel is taking.They are actively managing each distribution channel with KPI's in place to ensure each channel is performing best for them.That proactive stance lets hotels take control of their distribution strategy.Instead of falling back on OTA's as an easy option, hotels are carving out higher profit margins for themselves by putting in the work to drive direct bookings. That's fantastic!Put Your Hotel FirstThey key here is that hotels need to be wise to the agenda of each agency they use. This sounds obvious, but it's an easy mistake to make! Yes, everybody wants hotel bookings, but not necessarily for the same reason the hotelier does.As Mirai notes, "OTA's and Booking.com, like all businesses, primarily look out for their own profit (and not yours)." There is inevitably a conflict of interest. Profitable partnerships are possible, but you need to have clear limits and a strategy going in.It's very common for OTA's to make comments when a hotel begins to implement a book direct strategy. They might tell you that direct bookings are more expensive, or that you risk your hotel losing a 'preferred' status.They might even tell you that change is difficult, and you'll ultimately fail. Here's a well-known, thoroughly debunked piece from Expedia in 2016 arguing that direct bookings are costing hotels big - click here.Taking advice from an OTA on your distribution and marketing strategy is foolish. They are not giving to give you sound advice to help you grow your business directly. They'll give you great advice on profiting on their channels, but that's hardly the same thing.Hearing that no change is needed can sound great - after all, no one really likes to change.However, you're passing up profits, paying too much in commission, and losing on the chance to gain valuable guest loyalty if you don't!ConclusionMirai is correct in their analysis. It's vital for hotels to get advice on their strategy from the right people, and create a long term plan. Stick to that plan even if there's friction at the start. You'll reap the rewards soon, and you'll feel more in control of your hotel's bookings.If you need advice on implementing a book direct strategy (and who doesn't!), check out The Revenue Manager's Guide to Building Direct Bookings as a great starting point.Our top 100 clients saw 41% growth in their direct booking value on average last year. Since we partner with hotels specifically to drive direct bookings at a low cost, our success is your success. If you'd like to chat, send us a message here.
Article by Maeve Walls

8 Key Revenue Strategy Trends for 2017

Net Affinity 16 February 2017
Even compared to 2016's chaos, making predictions for 2017's revenue strategy trends has proved a challenging task! In many ways, 2016 was a year for defying logic and taking actions that would have been seen as preposterous months earlier. With any luck, 2017 will be a bit steadier.Revenue managers' drive to progress and develop brings optimism, possibilities and opportunities.This benefits the travel industry at large, and certainly the hotel industry in particular. Tourism accounted for approximately 1 in every 11 jobs globally in 2016.The key to how successful progression in revenue management will be lies in how well hotels embrace and adopt changes, and how quickly they do so.A recent survey from Cornell of hotel revenue managers worldwide reveals that many want to look beyond the traditional focus on revenue per available room. The survey has led to really insightful feedback from industry leaders commenting on talent development, proper training, breaking down silos and use of metrics as the cornerstones to real progression and success - give it a read!2017 is already 6 weeks old and making last year feel like a distant memory, so let's look forward at the key revenue strategy trends shaping up for 2017. We've explored how those trends will impact your hotel's revenue strategies.The trends:A Continued Focus on Book DirectPredictive AnalyticsMobileMobile PaymentsOnline Reputation & Brand AdvocacyUnderestimating the CompetitionChat AppsExternal Factors 1. A Continued Focus on Book DirectThe Book Direct trend will continue for 2017, with an increased focus on loyalty and advocacy.In 2016, 'book direct' became a bigger part of the conversation, with large brands like Hilton, Marriot, InterContinental, and others rolling out robust campaigns to grab consumer attention.In 2017, the trend of focusing on clear and tangible reasons to book directly on the hotels website will continue.However, there will be a few changes in approach as hotels take on board lessons from the past 12 months:2017 will be a pivotal year. We will get a clearer picture of how the continued offering of lower rates to 'loyalty' guests works out. There have been grumblings that all is not rosy with these particular brand book direct schemes. Are high marketing costs and discount prices sustainable?Relationships with OTA's are swinging towards reconciliatory. Hotels will need to accept that travellers are still going to use OTA's. They offer a huge value to guests, and it's not a case of either direct or OTA. Instead, hotels must try to emphasize their own value, both to guests and in their relationship with OTA's.Recognize that hotels and OTA's currently do both need each other. Hotels must weigh the balance of power in their own direction. More challengingly, they must maintain it.In terms of incentivising the guest to book direct, there's no point throwing the kitchen sink at it! You are eroding your bottom line, and, past a certain point, giving the guest multiple items to process and value will only add confusion.Hotels will seek to really promote a value add item, instead of purely working on a discount approach. With so many hotels promoting a book direct message, a value add item is the only way to avoid eroding your bottom line to unsustainable levels.Your hotel's unique reason to book on the hotel website should be clearly presented, easily understood, and of genuine tangible value to the guest.Use the reasons to book to incentivise guests to opt into your loyalty scheme. This works to ensure the guest stays not just once, but returns in the future.For your active, loyal guests, 2017 will be a year of actively encouraging them to become brand ambassadors. There are technology providers you can partner with to achieve this - here's one. 2. Predictive AnalyticsWe're predicting an increased adoption of predictive analytics tools.Predictive analytics, no matter how you look at it, is the future of revenue management. Although predictive analytics itself is not new, the volume of data, the reliability, and its real time nature are.Current research by Dr. Lalia Rach for the Hospitality Sales and Marketing Association International suggests that predictive analytics now underlies all of revenue management. "At most hotel companies, revenue management has evolved from just a rate-setting function to a strategic discipline that relies on predictive analytics to guide the entire enterprise's quest for increased profitability," the study concludes.Revenue strategy decisions are evolving, and becoming based on data and current activity rather than historic trends or past performance.However, with just 6% of European Hotels and 10% of USA hotels using a revenue management system, it's a pretty low adoption rate with quite some way to go.In terms of the available technology, it would appear Expedia are aiming to make the most of this low rate with their Rev+ Tool.Why Isn't Everyone Using It Already?What's getting in the way? Many hotels struggle with internal power struggles, with general managers occasionally overruling data-driven decisions with old rules of thumb (e.g. 'Take last year's numbers and add 2%').Although so much of the talk and focus in recent revenue management articles centres on data, this masks the reality for many hotels. It looks like hotels outside of larger chains aren't keen on either investing in the technology or adapting their working approach. A combination of factors are likely causing this:Barriers to investment (e.g. price, time to train employees)Lack of product knowledgeAn under-estimation of the benefitsSharing data with departmentsIt will be interesting to see how the number of hotels using a revenue manage system changes in 2017 - or doesn't!3. MobileMobile is now the core traffic platform. Hoteliers and others in the m-commerce space must focus on how products are displayed and mobile user experience. Adoption & acceptance of new methods of payment are needed.We have all seen the growth in mobile transactions over the past year. In most cases, it is now the largest source of traffic when looked at by device. Our own clients saw a 54% growth in transactions taking place on mobile devices this year. Mobile is no longer a consideration - it's the first platform to look at.From a revenue perspective, this means being acutely aware of how the product displays at a mobile level and how good the user experience is. Be aware that a user will not interact with your website in the same way at desktop and mobile levels. Here's a good summary of core items to optimise for mobile UX.For hotels in particular, how positive is the booking process experience, and what stages may cause friction for users? Consider:Forms: Small fields cause trouble on mobile. Also, if there's too much data to fill in, they get very cumbersome very quicklyPayment: Users require reassurance on security - it's one of the major hurdles to overcomeHere's a good overview on what to look out for in the booking process from UX matters.All this means being educated on the importance of UX at a mobile level. You must be able to confidently assure the powers that be that real and continual investment in mobile platform is a must. and to be aware of what you want from your mobile site.4. Mobile PaymentsIn 2017, the payment process comes into sharp focus at the mobile level.At some point, the user is going to have to guarantee their booking. While this can take many shapes and forms, hotels tend to be fairly rigid on this being a credit card number. Why not? After all, it's the way it has always been done.There are a few reasons to move past the credit card - one of them is your bottom line.Payments on mobile are moving past the credit card, opening the doorway for mobile conversions to finally catch up with mobile traffic. From Paypal, Google Wallet, Apple Pay and Paytm, innovative payment methods are making mobile bookings easier.Some predictors go as far as speculating that, within the next five years, half of today's smartphone users will use mobile payments as their preferred method of paymentThis may be overly optimistic, considering that there is some way to go before consumers fully accept and adopt these payment methods.Recently, a Gallup study found that only 13% of US adults have a digital wallet app on their smartphone. Primary barriers to adoption mentioned were security, lack of knowledge and no perceived benefits - those aren't problems to take lightly.The barriers to adoption should be expected. Mobile wallets will see greater adoption with a younger audience and, in time, usage will filter through to the greater majority.5. Online Reputation & Brand AdvocacyBrand advocacy leverages the power of positive reviews further.The link between positive quality of reviews, review rankings and the consumer's decision to stay with the hotel cannot be taken lightly. In terms of the leisure guest, it's widely recognised that reviews are critical in the decision process. You can have the best price in town, but if the reviews are bad, the leisure guest will go elsewhere.On the other hand, studies show that prospective guests will prioritize positive reviews in their decision - even over price.What else really matters, as long as you're getting those reviews? It is the way your hotels use these reviews that matters. This is called brand advocacy. Hootsuite defines it as the practice of leveraging peer-to-peer recommendations to grow brand awareness and develop strong customer loyalties.It is not enough to proactively manage reviews. To start with, your positive reviews need to be visible on your hotel website. To reassure guests and persuade them to continue with the booking, showcase reviews to act as a sales tool to help convert bookings.The Role of Social MediaSocial media enables hotels to hone in on their best, most vocal advocates, and then leverage their opinion further.The influence of peer opinions on social media are very valuable, and can help create a base of loyal guests. According to Hootsuite, 92% of consumers trust brand advocates, and 9 out of 10 say recommendations from friends and family members are their most trusted form of advertising.Always encourage guests to share their experience, at all the various stages of their trip. Encourage them to share their booking, share photos, and to share a review of their stay after they get back home.To persuade guests to be vocal, provide an incentive.For example, you can reward friends with a discount when they share, reward the guest with a discount for their next stay, or give them an add on to their upcoming booking.6. Underestimating the CompetitionPerhaps it is the hotel industry's sunny disposition that has lead us to under-estimate competition in its various forms. However, it's time for that to change - there are big players making big moves, and it's bound to affect our hotels and revenue strategy sooner rather than later.ExpediaA few short years ago, many hotels were bound to Expedia contracts, and trying their best to get out of allocation agreements! Today, though, Booking.com is typically at the centre of attention.Expedia is coming back strongly to centre stage, however. Hotels and news outlets are commenting on Expedia growth. Together, a more profitable relationship is being attempted: hotels are taking a more proactive approach, and Expedia is positioning itself as the "friendly" partner for hotels.Furthermore, Expedia's Rev+ is being touted as a product designed and developed with hoteliers, for hoteliers, and it's free. Nothing is free in the long term, though.We've been through this a few times before, so be warned!AirbnbMany hoteliers are quick to scoff at the idea that Airbnb will significantly impact their business. The traditional thinking is that travellers prefer the experience of their hotel. They want to be in the heart of things.Airbnb, however, has expanded the available options. They change the mindset of travellers in terms of what accommodation is possible. Their platform offers that 'unique stay,' and we all seem to want that unique vacation. When you've seen 20 friends in the last year posting pictures from the same stretch of Spanish beach, the lure of something a bit different is powerful.In a straight comparison between the accommodation types on offer on Airbnb for your local area, you may scoff that those offers pale in comparison to your property.One line of argument is that Airbnb isn't infringing hugely on the traditional hotel market. Instead, it's opened a 'shadow market' of previously untapped potential. Many Airbnb users, the argument goes, wouldn't be travelling at all if it weren't for Airbnb's price points and their unique offerings. So, they conclude, hotels aren't losing business. At least, not much.Don't be so quick to dismiss the longer term impact of the so-called sharing market. Instead, appeal to those 'experience seekers' on your own site.You know your property best, and you know its best features. Be sure the unique qualities of your hotel, along with its comforts and amenities, are highly visible on the website. Let the user easily see why your hotel is the better choice!GoogleHow could you possibly underestimate Google, you ask? Precisely because they have so much control over the market, it's easy to take that power forgranted. Stay aware, though! Be mindful of how much control has been given over to one corporation. They control:Search results rankingsWhich adverting formats are deemed acceptable - consider restrictions on floating banners, etc.Mobile rankingsWhat's deemed as secureHow people find hotelsHow people find anything!What we pay for traffic, in large partThere are suggestions that Google will in time become an OTA. Howver, when you look at what they already control, wouldn't being an be something of a downgrade for them? Additionally, there would be uncountable issues with competitive conflicts.Keep an eye on your competitors! Some of them aren't who you'd expect, and you must look beyond your local competitor set when developing your revenue strategy.7. Chat AppsChat apps are one of the latest ways people engage in conversation.Generally speaking, we are not terribly keen on actually talking to people. Email was the original high-speed saviour for this, but we are demanding faster satisfaction than ever. WhatsApp, Facebook Messenger and good old-fashioned texting are filling that gap.Guests want to communicate with hotels in the same way we communicate with everyone else. Chat apps are the answer.One option is to 'go native' and develop an in house system. Another option is to look at Facebook, WhatsApp and others. Chains have been quicker to adopt chat app technology.For example, since Starwood commenced trialling WhatsApp 2 years ago, the program has expanded to 175 properties throughout the EAME, with the standard of receiving a response 24/7 and within 60 seconds! Here's a good piece from Skift on hotels using messaging to connect with guests.Chat apps are no doubt on the rise, and the challenge lies in seeing how they can monetise interactions without becoming 'spam.' Additionally, marketers will need to learn how to track effectively which chats result in a booking or ad on at a later point. Without effective tracking, it will be difficult to learn how chat apps should factor into a revenue strategy.Chat apps look set to become core to a powerful customer service tool that builds loyalty, engagement and the overall guest experience.Bear in mind some pitfalls of using a chat app:Increase in customer support resourcesIssues trying to priorities all support items, as channels like Facebook require immediate responseIt makes people lazy by encouraging them to ask questions whose answers are already on the websiteIt can degrade the customer experience if you don't manage it properly8. External FactorsAlthough not an item you can control, external factors are having a greater an impact on bookings and revenue strategy than ever. Continued fear of terrorism, a weakened sterling and the new presidential administration in USA all change how and where people will travel to. There's also the importance of the emerging markets, including China, India and Brazil.Some traditionally strong geographic markets need to be monitored closely for change. Work on alternatives to ensure you're not over-exposed in a market that's in decline.A recent webinar from Review Pro referenced growth forecasts for 2017 from United Nations World Tourism Organisation. Worldwide, they're predicting just over 3% growth, compared to almost 4% in 2016. They predict 2.5% growth for Europe, in an increase from 2% in 2016.Our own results show UK bookings have continued to grow for January 2017, with approximately 18% growth.At first look, it appears that the weaker sterling is not having a negative impact. However, Northern Ireland bookings have had significantly slower growth at just 2%. This may indicate the sterling is having more impact on a leisure market. USA bookings have also seen growth for the first month of the year.We'll be watching closely for any changes in patterns!ConclusionAs always, a trends list puts forward many changes to come. How far will these revenue strategy items progress over the 12 months? As we've all witnessed, it can take time for changes to take hold in the hotel industry!Funding and belief may be the stumbling blocks stopping the use of predictive analytics in the short term.Mobile is already here - it's just a matter of how well hotels and the industry at large adopt ways to shop and pay on our phones.Reputation has always been a critical evaluator in all our lives - not just business! What is changing is how hotels promote their reputation and empower their positive reviewers to become true brand advocates.Tech advances are boundless, and the ways hotels embrace advancements for practical and positive use is key. Chat bots may take time to perfect, but they are a valuable way for hotels to engage with their guests on the platforms they're most comfortable with.In reality, of course, none of us can really predict the future. Looking back on the past 12 months of global upheaval, the saying "anything that can happen, will" rings truer than ever! So, to keep our best foot forward, plan ahead and keep evaluating what's happening. Don't just look at events on your doorstop - try to take in the whole landscape.
Article by Niall Lenihan

How Do Hotels Grow Rates? 5 Successful Approaches from the Experts

Net Affinity 4 January 2017
The annual budget season for hotels has come around again! For dedicated sales teams, this means deep planning and foresight to improve the past year's successes and overcome potential failures. A big part of this planning is tackling the challenge of rate growth while also driving direct bookings.Our goal today is to provide 5 successful approaches to rate growth we've come across in our work. We've been in the trenches, and we hope these tactics will be relevant, successful approaches for your hotel.We'll be chatting about:Distribution SegmentsCompetition AnalysisGiving your Hotel Website the AdvantageAvailabilityGroup BookingsLet's dive right in:Distribution SegmentsWhen examining your distribution segments for rate growth opportunities, start by reviewing each segment for the year gone by.Challenge yourself on the lowest performing ADR segments. Ask yourself what you might have done differently on each segment.Could you have started your Best Available Rate at a lower figure? By starting with a lower BAR then gradually increasing as the date approaches, you gain more total revenue than you would by starting too high and needing to reduce at the last minute to pick up bookings.Are each of your locally negotiated corporate rates reaching the necessary annual room night threshold to entitle them to a corporate rate? If not, try giving them a dynamic percentage discount - for example, 10% off your Best Available Rate rather than a fixed corporate rate.It is important that when you review your segments to examine the net rate, subtracting commission paid to each channel from gross gains. If you remove a channel with higher commission rates, could you replace the business with bookings from channels with a better cost per acquisition? It's very likely that you can, and you'll be saving your bottom line.To find the most profitable channesl for your hotel, explore the differences in commissions and net values between a direct booking and your OTA commission levels.When you make sure your marketing spend is profitable, direct bookings are often the most profitable. Higher commissions make a huge difference to your bottom line, even if they seem like the path of least resistance.Competition AnalysisAnalyse your competition carefully. In a few hotels I've worked for, there have been instances where a group enquired and we knew we were directly competing with our neighbours for the business. There are a few approaches to take here to drive your overall goal of rate growth.In some cases, we would drive them into the arms of the competition by quoting a higher rate. This would let our competitors fill up on group business at a lower rate. When the next group inquired, we were able to drive higher rates for the next group, knowing when they enquired that the competition didn't have the space to quote for them. If this strategy is successful, you could then take complete rate control within your market.The same concept applies for BAR and Package business. Review your competitors in detail - how many rooms do they have? How many rooms do they have within each category - can you identify their rate strategy? Try and be as independent as possible with your rate growth strategy.Give added value to your guests, and they will understand the differences when they compare your higher rates to your competitors'. If you make your value proposition strong enough and your market allows for it, value can trump price to a certain point. The strongest added value at the moment within the market is a complimentary breakfast, and we recommend bringing this into packages and rate plans where possible.Give Your Hotel Website the AdvantageGive your website the advantage over your other channels. Managed correctly, your direct channel has the lowest cost per acquisition, and it should be your biggest focus for rate growth. When guests book directly, you get two important benefits: you save money and increase revenue in the short term, and you have a much bigger opportunity to acquire loyalty and repeat bookings in the long term.One easy way to promote direct bookings and achieve ADR growth is to remove the Single room option from all channels except your own site. This will benefit you in a number of ways. Firstly, your website will truly be offering a "Best Rate Guarantee" for the Single room category, rather than simply maintaining rate parity with OTAs.Other channel partners currently actively bidding on your brand name will immediately reduce spend, since the fact that they are no longer able to match the Best Rate Available will cut into the conversion percentage. This in turn will reduce your average CPC - you'll save money, and every Single Room booking will come directly through your website.It is important to note that won't affect your parity agreements with OTAs and other channels. The only change will be that you are only offering a specific room category on your own site.However, a room category by itself is not a reason to book direct. You must also offer a clear, compelling and unique reason to book direct. These are different from your hotel's overall selling points (e.g. free WiFi, no booking fee, a free children's club, and other things that should be offered across all channels).For example, free breakfast is a compelling, valuable, and affordable (for you) reason for guests to book directly on your site. You can also consider an offering like a free item on arrival, early check in or late check out. Avoid putting in 'ordinary' perks with the extraordinary ones - you'll dilute the overall value of the offering!AvailabilityYour availability strategy comes with huge opportunities for advantage. Review your lead time and cancellation percentages for each channel. Reconsider when you give availability to channels: instead of giving them 12 months in advance of inventory, try reducing it to 6 months. Let your website sell your longer lead bookings, rather than keeping long term availability on all channels.In a few recent cases, I have seen hotels who offer availability on all channels 12 months in advance. Their business on the books looks strong, but once you dig down and analyse cancellation trends and percentage, the majority of the business on the books will wash down from OTA partners.If you are a property with a high volume of weddings bookings, consider implementing a minimum stay policy to try and maximise the shoulder nights. Offer package options to your guests, rather than just your Best Available Bed and Breakfast rate.Hotels can assist the couple by personalising the page for them with a picture, or even the running order of the day. A hotel might include dining and spa packages if some guests are staying longer than one night as another option to Bed and Breakfast. The key is to upsell your hotel packages.The Art and Science of Group BookingsA former General Manager of mine in London would always ask a series of questions as we discussed the group highlights for Incentive, Corporate and Leisure group bookings for the past year: Did we need them? Could we have got more on the rate? Can we push them to a different week next year?I always found his thought process extremely interesting: our GM challenged the entire sales team on a weekly basis when we met each week to discuss the Group forecast for the year.We would review week by week, 52 weeks in advance, and try and make the jigsaw fit. We put a massive emphasis on group business. Food and Beverage spend was paramount. However, with a whopping 447 rooms to sell on a nightly basis, the room block size was even more so.The greater the room block, the more we could drive our Corporate Rate - and, more importantly, our Best Available Rate and Packages on our own website.Groups Bring Their Own ChallengesWhen groups confirmed, however, the real work begins. The saying is true: "sales sells operations nightmares"!When a group confirmed, a member of the sales team would pay a visit to the hotel manager - when she heard our knock, she knew that a group bringing some operational challenges had arrived. Those operational challenges could be a mass group arrival, breakfast or even parking for the coach.An Ideal GroupA perfect group would consist of 150 rooms arriving on a Sunday/ Monday and departing after 3/4 nights. To achieve this, it's key to use rate to incentivise a Sunday and Monday arrival. A group arriving on a Wednesday, for example, would displace too much Corporate and Leisure travel. If one group did not consist of 150 rooms, the new goal would be to get 3 or 4 groups in house adding up to that total room block.The fundamental goal of group business for any hotel is to get confirmed group business on the books early. After you have that, you can adjust your rates accordingly to maximise rate.All of the above is the ideal scenario for any mid- to large-sized hotel. However, adding an extra 200 bedrooms to your property isn't the only way forward! There are plenty of other opportunities for hotels to maximise occupancy levels whilst still growing your average rate.ConclusionAchieving rate growth is a challenge, whether you're city centre property in London or situated on Ireland's far west Dingle Peninsula. However, the key factors and influences are comparable for every property, and the questions required to challenge any team to achieve the rate growth goal remain constant.Do we need that business from that channel? How much did it really cost us? Could we have got more on rate?When you start seriously asking yourself those questions, you'll come up with the innovative solutions you need to see strong rate growth.
Article by Taylor Smariga

The 12 Days of Christmas Voucher Sales

Net Affinity 12 December 2016
75% of voucher sales occur in the 12 day run up to Christmas.The countdown to Christmas is officially on! What's on your wish list? For us, we're wishing all our hotel clients a string of successful voucher sales. To help make those holiday dreams come true, we took a look back at last year's voucher sales.We wanted to figure out when you should start to see your coffers fill, which offers are likely to be successful, and help you ensure you're taking the right approach to promoting your vouchers.When do hotels really start to see momentum on voucher sales in the countdown to Christmas, and how can your hotel make the most of the holiday season? Let's break it down.When are Vouchers Strongest?Voucher sales are strong throughout December, but they really start picking up momentum from the 13th on, with nearly 75% of sales in the 12 day run up to Christmas across all our clients.Last year, voucher sales peaked on, perhaps unsurprisingly, the 24th of December. Almost 9% of vouchers sold in December were sold on the 24th alone. A hotel voucher, as it turns out, makes a great last minute Christmas gift for those of us who may have forgotten to take care of their shopping earlier.Perhaps predictably, most of us tend to leave our holiday shopping to the last moment. However, that doesn't mean your property should do the same. When should you have vouchers loaded from?Taking Advantage of Voucher SeasonStarting from November, your vouchers should be live and ready to go. Voucher performance tends to begin picking up from November 20th, although you should have them live a few weeks earlier to start building momentum. Expect to see a larger uptake from December 12th or 13th right up through the 24th.Ideally, hotels should ramp up their general activity in September/October to increase their remarketing and email lists before November. The bigger your audience, the better your reach.Creating Amazing VouchersFirst things first: Keep Santa under wraps until the time is right! Start with more generic gift voucher messaging and going into Christmas from the 20th of November onwards. Any earlier and you might fatigue users by the time the holiday season arrives in full.Be sure to stick to emotive imagery for your ads. Emotive hotel images far outperform designed, "ad-like" images on Facebook - people simply see too many of these for most to be effective. Instead, start with a beautiful wintery picture of your property and work from there.For the offer, we've found that early purchase incentives tend to work well. For example, you might offer EUR10 for every EUR100 of voucher purchases in November. When you hit December, make sure your offers are competitive.What kind of campaigns should you run for your vouchers for the best return on your investment? The two big ones are remarketing - both through AdWords and social channels like Facebook - and email. You want to communicate to users who are already familiar with your hotel and your brand.For your remarketing ad types, we've found that carousel ads are performing well this year. They let guests see 3 or 4 different images, and typically get strong engagement.You should make certain to have email vouchers available, especially in the last few days leading up to Christmas. Our clients received a full third of their overall voucher sales last year from December 21st to the 24th.ConclusionTis the season! Your vouchers are running, your hotels are decorated with tinsel and holly, and your future guests are flocking to buy up vouchers.Let us know how your Christmas voucher sales go this year, and if you have any questions, don't hesitate to reach out to our team. We're the experts.
Article by Maeve Walls

[Infographic] How Should Revenue Managers Use Data?

Net Affinity 28 October 2016
How should revenue managers use data? What common pitfalls do they fall into? What are the contemporary "best practice" revenue management techniques and intelligence you should be aware of? Our Head of Revenue Strategy, Maeve Walls, set out to answer those questions.In her 3 part series, she discussed:6 ways RMs use data to make their hotel smarter. Use data to make your hotel website a haven of carefully-selected images, content and rate plans. No matter how chaotic the rapid changes in the industry may seem, revenue managers should be absolutely focused on clarity and data-driven decisions. Do deal sites pay off? What can your hotel pace report tell you? Data is key to understanding almost every important issue your hotel faces.5 customer concerns RMs should be involved in addressing. At first, it may seem like customer concerns are for other departments to deal with. However, there are important customer issues that revenue managers must be involved in. These include availability on different channels, pricing, and even issues like reputation management.6 ways for decision making to go wrong. What happens when revenue managers stop using data? Decision making processes sometimes fall apart - why?Hoteliers are busy people- there's often no time to sit and read! With that in mind, we made a quick-and-easy infographic to help you out. Give it a quick look here:
Article by William Cotter

10 Powerful Reasons Independent Hotels are Better Placed to Win Market Share over Chains

Net Affinity 4 October 2016
The independent hotel market in Europe is a big business. It's big in terms of employment, tourism and contribution to the local economy. Most importantly for our industry, independent hotels are big in terms of room inventory.This inventory is what makes independent hotels attractive partners for online travel agencies (OTAs), and it's at the heart of the current struggle for independents and chains alike to strengthen their direct bookings. Fortunately, along with all that inventory, independents have 10 powerful, often overlooked advantages when it comes to competing for market share.We'll talk about those 10 reasons below, but first, how did we get to the current state of play?Independent Hotels are an Attractive Market for Online Travel AgenciesEuropean independent hotels make up almost two thirds of the room supply in Europe, making them a very attractive market for OTAs like Booking.com and Expedia.The independent hotel business is so attractive and so profitable to OTAs that they have grown their businesses very successfully on the back of one thing: availability. They sell your room stock on their sites, for a fee. Through the strength of their brand, marketing and technology, OTAs have cornered a very nice business for themselves.This availability is an independent hotel's most powerful tool. Forget rate parity. Parity without availability is a moot point. Let's step back for a minute. How did OTAs corner this market?PhocusWright and H2C commissioned a study in 2015 which reported that independent hotels believe that their direct website is their most important channel. In other words, direct bookings are a priority for them.However, there is often a disconnect between what an independent hotel prioritises and the actions they take to make those goals a reality.Part of this disconnect lies in the scarcity of resources that many independents deal with on a daily bases. Namely, there is an industry-wide deficit in revenue management and marketing skills, as well as limited advertising spend. This can, at times, lead to independents struggling to stay on top of a rapidly changing technology landscape.This is where OTAs have excelled. They filled the critical skills void at a time when independent hotels were cutting back on staff numbers and technology, following the recession in 2008 onwards.Hotels turned to the OTAs for much needed business and gave them their room stock to sell.That's how we've gotten where we are today, and the OTAs have been extremely valuable in helping independents sell their rooms. Unfortunately, this has come hand in hand with high commission rates, and independent hotels have little leverage to negotiate better rates due to the sheer size of OTAs.The past four years have seen strong growth in the world economy, with both leisure and corporate business driving growth and allowing hoteliers to push ADR.Hotels now say they want to reduce reliance on OTAs, and this makes sense in the current economy. How can they do that when OTAs have such strong branding, marketing and reach, though?What Are Chains Doing to Reclaim Direct Business?If you're a chain hotel, you have two strong options when it comes to promoting direct bookings: negotiations and loyalty.Large chain hotels like Hilton, Marriot, Wyndham etc. are scoring big by negotiating aggressively with their OTA partners. They have the muscle to negotiate their commission rates down to as low as 12% or better in some cases.Chain hotels have also been very good at keeping some control over their inventory and the business that they do with the OTAs. They've done this to such an extent that OTAs represent between 8% and 15% of their total business on average - a phenomenally low figure to most independent hotels.The other tool that chain hotels have in their armory is loyalty. They're good at running loyalty programs and driving points-based rewards systems for their guests. This works very well for them, but only to a certain point.Eventually, loyalty has a cost, and one thing that chain hotels certainly have is a lot of cost.There are many layers of stakeholders involved in a chain hotel business who all want their fair share of the pie. That's perfectly reasonable. However, the pie is only so big: margin for a chain hotel is limited.This is where independent hotels have a significant advantage over chain hotels.Independent Hotels Have Margin and FlexibilityYes, chain hotels have scale. They're big companies with centralised management, huge marketing departments and clearly defined processes. They're also, as a general rule, incredibly slow.Large hotels chains are like any large company. They are slow to react, turn, and shift with market forces. They're like large cruise liners: awesomely huge and beautiful, but these companies can be astonishingly slow to move, simply because of the sheer bulk involved.At the hotel level, branded chain hotels have no flexibility over strategy, no input into marketing, little flexibility over pricing and no control over their website. Independents have all of that.Large, international chains simply can't adapt locally, and this is a crucial point. GMs of chain hotels tick the required boxes, complete their Excel sheets and follow best practice guidelines dictated by head office.If chains are like cruise liners, independent hotels are like yachts. Sleek, nimble, and quick to adapt to the changing environment.The rapid pace at which today's market changes favours independent hotels over chain hotels.That's why some chain hotels are getting into bed with the OTAs: because they have to. They're struggling to retain market share, and need revenue to satisfy the demands of their stakeholders.Large chain hotels are failing at what they should be doing best: building brand. Instead, they negotiate to take demand away from their competitors in the short term, rather than invest for the long term. This lack of investment in technology, marketing and revenue expertise is giving the power to the OTAs.Independent hotels can be equally guilty of this: in times of low occupancy, it can be tempting to effectively hang a Booking.com sign over the front door instead of investing in the means to drive bookings through direct channels. However, there is another way.Independents are IndispensableIndependent hotels are indispensable to OTAs on a collective level.From an OTA's perspective, independent hotels are the crown jewels. OTAs are capitalising on a fragmented industry with a push for higher margins, safe in the knowledge that independent hotels need to work with them.The flip side, of course, is that OTAs rely on independents' inventory as well.OTAs need inventory. That's one of the reasons the Priceline Group is buying into technology providers such as revenue management provider PriceMatch and hotel marketing platform Buuteeq, both part of their BookingSuite.When hotels use these services, OTAs get better visibility on your inventory. Through these tools, OTAs get visibility on your rates. This allows them to better monitor parity, making it increasingly difficult to offer different rates on your own site.The idea that OTAs ought to be allowed to dictate rate parity is one that has been hotly contested by many hoteliers, and has been behind more than a few recent legal issues.Without availability, rate parity is a moot point. If an OTA doesn't have rooms to sell, their business wouldn't exist. That's one on the reasons they're interested in mid-tier hotel technology companies. If you're connected through those systems, they have more visibility and potentially more control over your stock.For example, what if an OTA bought up a number of channel managers? If they bought the top three channel managers in Europe, they would have a far deeper insight into the room stock in Europe, putting them in an even stronger negotiating position.As restrictive and frustrating as many hoteliers find their relationships with OTAs, though, there's no doubt that OTAs have helped independent hotels greatly. They have given them a global reach and placed them on a level playing field with chain hotels.The issues between OTAs and hotels come from negotiating the relationship - there's no question that the relationship has value. To bring in the obvious metaphor, no one's breaking up. We're just asking for a little space.Independents Should Focus on What They Do BestTo get that space and pull more direct business out of the OTA's shadows, independent hotels should focus on what they do well: focus on the guest to deliver a more personalised experience. You can partner with local providers to give a more natural experience and capture the essence of your neighbourhood, town or region.These features are what draw guests to your hotel and benefit the local economy. Guests stay for the authenticity and uniqueness of the local experience. That, in part, is why Airbnb has been such a hit. Guests increasingly favour a more authentic, personal service.The hype around the millennial's desire for a more interesting hotel experience is why chain hotels are getting in on the game with their 'boutique' offering. This offering is, in truth, a simple standardised 'unique' offering.An independent hotel, on the other hand, has the opportunity to genuinely distinguish its customer service and property as unique. They can respond to guest needs quickly, delivering a personal experience which gains the hotel greater loyalty from their guests.Independent hotels have the freedom to play around with their brand. Not having a specific brand standard can actually be liberating. Marketing teams have the freedom to try different channels quickly, and the autonomy to change strategy as needed.10 Advantages Independent Hotels Have:Independent hotels have greater scope for creativity and identity, instead of adhering to standardized brand guidelines that might lack relevance in your local marketIndependent hotels have more margin to play with, i.e. there's a smaller number of stakeholders taking a piece of the pieIndependent hotels have to deal with less bureaucracy, giving them agency on distribution and commercial strategies, free from restrictive agreementsIndependent hotels have the ability to be much more proactive in terms of revenue management, and can certainly be more creative in terms of book direct strategiesIndependent hotels don't need to fill their hotel every night - they can survive with lower occupancy rates, giving them more freedom to refine strategies and allocate budget as neededAn Independent hotel's budget is targeted toward making an impact on one hotel. There isn't a bigger brand franchise to feed or satisfyIndependent hotels really only need to make what they need to survive and make a fair profitIndependent hotels don't need a 1-800 number or centralised call centre. While chain hotels provide a centralised call centre at a direct cost to the hotel, either through franchise fees or as a percentage of bookings, independents do not bear this cost.Independent hotels can freely focus on their guests' experience to give a more personalized serviceAn independent hotel's originality is more appealing now than ever as travellers look for unique, local experience - capitalize on that!It's true that branded chain hotels have a broader distribution reach. However, independents don't need their distribution to be as extensive.Branded chain hotels have successful loyalty programmes, but independents are free to take a more modern approach. Instead of an old-fashioned points based system, independents have the flexibility to create loyalty based on immediate value or discounts.In the digital age of immediate customer satisfaction, long term investments like points are less satisfying, especially when you're talking about independents with only one property or a small group of regional properties. What guests want is discount or added value now - not for some future date.ConclusionBranded chain hotels have strictly defined rules, regulations, processes, and associated costs.Independents have greater flexibility, providing greater freedom to explore and innovate.We believe it's time for independent hoteliers to realise that they are a very valuable part of the hospitality industry, that their inventory is highly prized, and that there is a broader ecosystem there to help and support them in their endeavour.There are hundreds of technology partners in Europe providing booking technology, revenue management, rate shopping, distribution and digital marketing expertise that hotels need to stay on top of their business. Use your hotel's margin to invest in these tools to help you continue to grow.Independents are key players on the hotel landscape, and they have access to all the tools they need to overcome the challenges commonly faced in the fight for more direct bookings.
Article by Taylor Smariga

6 tips for Combating High Cancellation Rates on OTA Bookings

Net Affinity 24 August 2016
Today's hotel guests are empowered and informed, which in some ways is very positive. However, it has also led to a trend of guests making multiple bookings far in advance, before cancelling ones they decide against just a day or two before their stay dates. High cancellation rates on OTAs or other channels can be a problem for your hotel if you don't have a strategy ready to deal with them.These high cancellation rates can lead to distorted demand levels for hotels, meaning non-optimal rates and lost revenue. Why does this happen, and what are a few quick tips for hotels looking to deal with the effects of these cancellation rates?We've put together a quick guide to help you figure out the causes of higher cancellation rates, followed by some quick tips. Our goal is to help you figure out:Which channels cancellations are coming fromWhat kind of cancellation rates you should expectHow to plan for them and turn cancellations to your advantageThe first thing to realize is that your cancellation rates will be very different for each channel, whether that channel is your brand website, an OTA, over the phone, etc.Where are cancellations coming from?Average lead times tend to be longer on OTAs. This is because their message to the consumer is to book now, even if they're not sure. They encourage guests to reserve a room even when they're still in the 'looking' or 'dreaming' stages of the buying process, with the message that they can take advantage of cancellation policies later.These messages are found explicitly on Booking.com's homepage, for example, and they're peppered throughout the booking process. They're far from alone - Expedia and other OTAs have similar messages:Even if this is in reality the same policy your hotel has on its brand website (free cancellation, no booking fees), these messages have a natural result: long lead bookings through OTAs have a higher cancellation rate than short lead bookings and bookings from other channels.Of course, these trends are going to be slightly different for every individual hotel. It's vital that you evaluate your hotel's own booking patterns - it may be that you get a much larger percentage of cancellations from Expedia instead of Booking.com, or that cancellation messages on your own site are creating a spike of cancellations on your direct bookings.Evaluate your cancellation rates on each channel. When you know where your cancellations are coming from, you can start planning for them. If you're not sure about the source of cancellations, how will you know where to start? When it comes to cancellations, forewarned is forearmed.What kind of cancellation rates should you expect?Our own data is showing us cancellation rates of up to 60% on OTAs across all of our clients. A recent study from Mirai found an average of a 19% cancellation rate on a hotel's brand website, compared to a 39% cancellation rate on Booking.com and a 25% cancellation rate on Expedia over a four month period.That equates to 104% more cancellations on Booking.com than on a hotel website, and Expedia's cancellation rate averages 31% more than the rate on the hotel website. These rates weren't divided on long lead vs short lead bookings, and it's good to keep in mind that bookings with long lead times likely had even higher cancellation rates.Why are cancellations higher on third party channels, and on OTAs in particular? One major reason is the culture of encouraging early bookings, illustrated above. OTAs are encouraging guests to book before they're even sure they'll travel.One of the reasons their encouragement works is inspiration. OTAs spend millions on market research, advertising campaigns and marketing strategies to inspire people to travel.These efforts are reflected on their website and in emails they send, and are extremely effective in encouraging booking - there's definitely room for hotels to take a few leaves from their playbook! However, this inspiration effect can also lead to casual bookings, especially if cancellation is free and guests don't pay in advance.When a guest is booking on a hotel's own website, experience tells us that these guests are generally more committed to the stay: this is reflected in the lower cancellation rate. For example, cancellation rates on our clients own sites are significantly lower than the rates on OTAs, averaging at only 7%. For hotels taking deposits at the source, it's an average cancellation rate of 4%. These guests are more serious bookers, and more likely to follow through on the stay.Even if you recapture a large number of your lost bookings closer to stay dates, it's likely that you're still losing money through cancellations (this all depends on your pricing strategy, of course). So what can you do to stay ahead of potential problems?How can I plan for cancellations?Unusually high cancellation rates have a few serious effects on your hotel's demand forecasting.They can distort hotel demand levels by inflating them to an artificial high. They can also lead to the hotel filling too fast - what kinds of bookings have filled it? Will they cancel later?In this case, when higher-quality demand starts within the usual decision-phase booking window (the time when the guest is no longer browsing or considering: they've made the decision to book), the rate may be too high for these guests or the hotel might appear to be fully booked when, in reality, cancellations from early bookers are just around the corner.When an OTA pushes early bookings and creates the perfect set up for high cancellation rates, they're holding up your hotel's most valuable asset: its inventory.How can hotels manage these bookings and deal with high cancellation rates?Here are a few quick tips to deal with cancellations:Pay attention to what channels are booking and when: monitor your lead times from each channel, online and offline, and figure out how many bookings you're getting through each channelFocus on the cancellation rate on each channel: how many guests actually stayed, compared to those that were forecasted to stay? Keep a record! This will help you track cancellation rates over time and develop a plan of actionConsider more restrictive cancellation policies on channels with larger numbers of cancellations. This will need to be checked against your OTA contracts, but if you're able to reduce cancellations on certain channels with a more restrictive cancellation policy, you'll also be able to reduce uncertainty.Of course, you want to avoid reducing the number of good bookings you get through these channels as well. To make sure a more restrictive policy doesn't affect this, run a trial for a few months before committing.Use overbooking practices: Don't give away the house too early and then close it out - you'll likely be filling too fast, with bookings that are quite likely to be cancelled nearer to the date. Tracking the pace of cancellations by days prior to arrival enables you to determine how overbooked a given date in future should be. It's not enough to have a fixed total number of rooms you overbook by.Reviews Allocation and Free-sale Bookings: If an OTA is operation on an allocation of rooms from you, are you topping this up too far in advance? Is the OTA selling the additional free-sale rooms and holding on to their allocation?Analyse Forecasted versus Actual Demand: Long lead bookings are distorting actual demand levels. When you track your cancellation rates over time, you can predict how many of these are likely to become actual bookings, and adjust your demand levels from there. A forecast is never 100% accurate and will always have some variation from actual demand. The difference between the forecasted demand and actual demand is the Forecast Error - the goal is for the error to be as low as possible. If you're seeing a higher level of error, it may be attributable to the cancellations.ConclusionTake these tips, and have a serious look at your OTA cancellation rate. Cancellation rates that are too high can have a big effect on your revenue. There are techniques, like those outlined above, that you can use to control cancellation rates and recover from high cancellation rates. However, to take advantage of those you need to have a plan.The more you're aware of where your cancellation rates are coming from, the more you'll be able to do to create a plan and stay in control! What techniques do you use to combat high cancellation rates?
Article by Taylor Smariga

Fighting Rate Disparity: Keep Your Room Rates in Check

Net Affinity 21 July 2016
Rate disparity, if left unchecked, can seriously impact your hotel's bottom line. Hotels often find themselves with lower rates on OTAs and other third party channels than they do on their own website - that's not good! So what can hotels do?This article will cover:The impact of rate disparity on your hotel's bottom lineCauses of rate disparityHow hotels can combat rate disparity and encourage direct bookingsLet's get started.Why Does Rate Disparity Actually Matter?What does rate parity mean, exactly? According to Eye for Travel, it can be thought of as "maintaining consistent rates for the same product in all online distribution channels - Expedia, Orbitz, Hotwire, etc. - regardless of what commission the OTA makes." It also applies to rates on your own website compared to third party sites.Rate disparity, then, is when wires get crossed and lower rates are offered on some or all OTAs than the rates your own site.Note: The reverse is much rarer. Rate parity clauses in OTA contracts usually prevent you from offering a lower rate on your own site. However, that's not always the case - check your contracts to see, as not all of them will require rate parity.Why is rate disparity important? There are two parties it matters to: you and the customer! Tt also affects OTAs, but they are mostly protected from harmful effects by their contracts - and if the price is lower on their site, it gives them an advantage.For customers, it can be a matter of trust. If rates on your own "Best Rate Guaranteed" site are more expensive than those on the OTA, you might lose their trust or lead them to believe that an OTA is offering 'discounted' prices.For hotels, when OTAs offer a lower price than your own website, there's no incentive to book direct - and you're still paying those OTA commission rates. Causes of Rate DisparityIf your hotel frequently experiences rate disparity issues, it's important to know that it isn't always deliberate. In fact, it's probably mostly accidental. Rate disparity is usually caused by - you guessed it - administrative issues.There are many channels your hotel is probably active on, and third-party channels have been known to change their prices based on factors like price and location, putting tremendous pressure on revenue managers to spend time they don't have monitoring OTA prices in an attempt to continue matching them.In Triptease's 2016 study, "OTAs Undercutting Hotels: A Billion Dollar Sinkhole," they found that:On average, the price on a hotel's website was undercut by an OTA 1 in 4 timesThis undercutting is costing hotels over $1B a year in direct bookingsDespite this, the direct price is an average of $10.27 cheaper across the board What causes this high rate of disparity? Their study lists 10 factors that lead to cheaper rates on OTA websites:Promotions might have been created directly with an OTA Market Manager or through and OTA extranet, meaning it isn't available on the hotel website.A property has an out-of-date rate code still running on an OTA. Remember to close them!The OTA has failed to change the rate they were given , for technical or other reasons - this may apply across the board or only to certain geographic markets.The OTA is using a different currency conversion rate than your hotel.The OTA has a base allocation, and you've sold out all other rooms of that grade and below.Your Channel Manager is tracking inventory from your PMS, and the CRS is suffering latency errors and showing inventory that's no longer available.The revenue manager might have linked the wrong OTA rate from their CRS.Your CRS does not support length of stay rates, but they are used on the OTA.Wholesale rates have been put on sale by the OTA - they might have sold them to third party sites. Unless your hotel has specifically agreed to the rates being sold, you can insist on the rates being removed.The OTA is using their commission to discount the rate or is applying a lesser markup to a net rate - this might happen all the time or only certain times, and may only happen for specific markets.Tarun Gulati, who has worked in the hospitality space as both a hotel CEO and in hotel sales, has similar conculsions about the causes of rate disparity in his 2015 piece, "Price Disparity Could be Cannibalizing Your Hotel's Revenue."He advises that human error during manual room and rate uploads to OTAs often occur, and it's common for managers to forget to revise OTA rates during an update, or to accidentally leave old rates on certain sites. He advises a channel manager to solve this.Other causes he lists are rooms being sold as a discount package by OTAs (which can be difficult for hotels to control, depending on their contract terms), inconsistent listings on OTAs (e.g. selling only luxury rooms on OTA X and only base category rooms on OTA Y), and OTAs competing with one another, treading into "grey areas of price parity agreements" in the process. When it comes to OTAs trying to beat the competition, Gulati recommends taking a firm stand - after all, when they exist, rate parity agreements go both ways.Most of these problems, as you might guess, are easy to resolve. The trickiest part is staying on top of problems! Fortunately, there are several technology providers that offer potential solutions for monitoring and adjusting rates - all you need to do is figure out which one is right for youHow Often Does Rate Disparity Happen?Rategain's March 2016 study analysed degrees of rate parity by location. They found that Dublin held steady at 26% rate parity (or 77% disparity), and London had just 13% parity between hotel brand websites and OTAs. For Dublin, on average, 26% of hotels practiced parity, 23% had hotels offering better rates than OTAs, and 51% were cheaper on OTA sites.In Venice, a shocking 97% of hotels offered better rates on OTAs than their own site - only 3% of Venetian hotels offered better rates on hotel brand sites, and no hotels included in the study practiced full rate parity. A different study from the University of Delaware, led by Dr. Cihan Cobanoglu, also investigated instances of rate disparity.In his study, they explored differences in room rates from 100 different 3- to 5-star hotels, based on the dates of booking and channel of booking. Here we're focusing on the channel, since rates changing as the date of check-in approaches is normally just a reflection of an updated, clearer demand forecast for that date. They compared direct channels to indirect channels. Direct distribution channels include calling the hotels, calling their reservation hotline (1-800 number, if they have one), and booking on the hotel's website.Indirect channels are OTAs like Expedia, Booking.com, Orbitz, Travelweb and Travelocity.Dr. Cobanoglu and his team found that hotels trying to claim a "Best Rate Guarantee" on their site were facing a real challenge.Indirect channels beat direct channel prices in every room rate collection point - 7 different channels on 4 different dates. Furthermore, demand on the date they were testing for was below hotels' forecasts, leading to prices dropping as check-in date approached. These results are... not the most encouraging. Namely, they point to insufficient revenue management practices across the board in the industry.Cobanoglu's diagnoses was that "the hotel industry needs to react soon and address this disparity to maintain the viability of direct booking", especially if hotels are claiming a "Best Rate Guarantee" on their own site.How Hotels Combat Rate DisparityIf you're advertising a "Best Rate Guarantee" or similar on your own site, which we recommend, it's vital to follow through on that. In most cases, OTA contracts will demand rate parity, although recent legislation in France and Germany and a British investigation indicates that the tide may be turning against these clauses. If your contracts include rate parity, follow the rules- but don't give OTAs a better price!Invest in the technology to monitor and update your rates if OTAs lower or raise them in certain times or locations. To comply with your contracts and avoid legal risks, it's also important to monitor your own rates.If your contracts don't demand parity, offer a slightly lower rate on your own site than you do on third party sites.Rate parity clauses also generally only apply to publically available rates - that means if you have a loyalty club, a discount group or similar, you can offer them better rates privately, via email, a login system on your website or over the phone. You can even offer lower rates to Facebook or Twitter followers!What can you do for publically available rates on your site to? Offer perks! Free wifi, parking or discounted tickets to local events are all great ways to make your site's offering more appealing than an OTA.ConclusionThere are many creative ways to manage your rates, but you should always have one eye out for rate disparities. Correcting rate disparities only costs you time in the short term, and it can save you thousands over time.When you overcome rate disparity issues, you encourage guests to book direct, maintain control over your property and prices, and give yourself the chance to capture more revenue.
Article by Taylor Smariga

Price Check Widgets - A Transparent Way to Drive Direct Bookings

Net Affinity 9 June 2016
The past two years have seen a relatively new product category hit the market for hotels: price check widgets. This sudden proliferation has come hand in hand with the increasing move to drive direct bookings. As OTAs consolidate, many hotels feel constrained by high third-party commission rates, and the benefits of a book direct strategy are more widely understood.How do price check widgets work? What are the benefits to your hotel of using one? Which price check widgets are out there?The premise behind price check widgets is simple: when placed on a hotel's website, it gives guests a clear, immediate way to see the price differences between the hotel's own site and the price on various OTAs. Ideally, the guest should see that the hotel's own price is equal to or lower than that of any third-party site. This doesn't always happen, but it's up to the hotel to ensure that their direct rates are better or the same as any third-party rates (there are a few widgets that will help you out with this - read on to discover which).This encourages guests to make their booking directly. However, it also benefits the guest: it saves them time shopping around, assures them they're getting the best deal, and gives them direct contact with the hotel. This in turn gives the guest more flexibility in adjusting their reservations, and builds loyalty.What Do the Experts Say?We've reviewed and reached out to the top price check companies in the market today to get their insights and look at what makes price check tools so useful:Nancy Huang, Head of Marketing at Travel Tripper, says that Travel Tripper has "seen our hotels earn tens of thousands in additional revenue" through their Rate Match tool. This is because price check tools allow customers to clearly see in the hotel's own booking engine that they are getting the best deal, instead of shopping around a dozen sites.Sophie Cartwright at Guestline offers similar sentiments, adding that "It can be the difference between clinching that direct booking and sending them back into the hands of the OTAs."So what are the options for hotels? Which price check widget is best for their needs, and where can they get it? We looked into the choices.Firstly, we inspected stand alone price check widgets - the kind that can be integrated with any booking engine, and aren't part of a larger system. After that, we looked at widgets that came as part of a larger package, and the key differences between the two types.Stand Alone Price Check WidgetsThese widgets can be attached to any booking engine, CRS or your hotel site. They are free-standing, lightweight and can usually be styled to match a hotel's branding.TripteaseThe first price check widget on the market was Triptease's. They invented the first widget, and created a whole new product category. Declan Ward, a representative of Triptease, says:"It's our firm belief that direct is best. When we launched two years ago, we realised after months of research that hotels were in need of one thing: a way to drive direct bookings. We launched Price Check, our smart widget that shows live prices from OTAs on a hotel website, and things really took off."Widely used and the subject of some recent controversy with Booking.com, it tends to be one of the first price check tools brought up in conversation. They boast 99.5% accuracy in the rates their widget shows, and work with hotels of all sizes. Unfortunately, they do not currently have any case studies available specifically for independent hotels. For theirPrice Check Widget and other innovations, Triptease were named European Travel Innovator of the Year at Phocuswright last year.Their Price Check Widget shows real time OTA prices and compares them to your own hotel's best available rate. One of the unique aspects of the Triptease widget is that the tool also comes with the option of adding 3 benefits of booking direct right next to the price (like free wifi or early check in), reminding guests of the benefits of booking on your site. ///ClicktripzClicktripz offers "conversion solutions for travel." The first solution they developed after their acquisition of hotel data science start up TheSuitest was their price check widget. They designed the widget to help "travel suppliers and online travel agents (OTAs)"increase their conversion rates.Unlike other price check tools, they don't seem to be specifically targeting hotels. Clicktripz works with a variety of client types, including suppliers, publishers, advertisers and travellers, so perhaps it's no surprise. Nevertheless, it's a broader arena than most price check tools are targeting, so they might have more opportunity for growth than other suppliers.ConvertioConvertio is a company dedicated to their Price Check Wizard, engagement messaging and a personalized offer engine. Their smart widget shows your own price at the top, followed by several OTAs below. According to their website, they help hotels garner 35% more direct bookings on average.They also offer comparisons at both the hotel level and the room type level, as well as customizable displays for different languages and currencies. Here's an example of the comparison at a room level:LiveRateLiveRate's exclusive product is their price check widget. Their sleek, simple widget integrates onto a hotel website's home page and links directly to their booking engine. It places the call to action - 'Book Now' - right next to a strong motivation to book, making the choice easy for the guest. It can be compared with up to 3 OTAs and customized to match your branding.CloudbedsCloudbeds offers a PMS, a channel manager, a booking engine, and a group booking engine they call their "OTA-in-a-box", along with tools like their price checker. Their Rate Comparison Widget is a bit unusual in that it can be placed on any page of your website - that means it can be featured on your home page, booking engine, or every page of your site if you like. It's also optimised for mobile, which is swiftly becoming a necessity due to mobile's dramatic growth.Their Rate Comparison Widget can integrate with up to 5 online travel agencies, and offers guests up-to-date, real time data. Their fees, which also include their booking engine and other features, start at EUR23 per month.World Hotel MarketingWorld Hotel Marketing, who also provide other distribution solutions and digital marketing services, call their widget a Rate Comparison Tool. It offers comparisons with "at least" 3 real time OTA rates. It's not clear if their tool is capable of offering further comparisons or is capped at 3, although in most cases 3 would suffice for a hotel's needs.Their widget can also be customised for your hotel brand's look and feel, a must-have if you don't want your price checker tool to feel out of place or too ostentatious.Price Checkers as Part of a Larger SystemOne way to ensure your price check widget doesn't stand out like a sore thumb is to make it a native part of the body - that is, to get a larger system that comes with a price checker of its own.Here are 5 of those systems. Let's see what they believe makes their widgets stand out from the rest.Hotel ChampHotel Champ offers their Price Comparison tool as part of their 'Triggering Toolset', a set of 10 tools designed to increase conversions. This kit includes tools like a USP comparison with your website vs the OTAs, live chat and an exit popup message.Their price comparison tool is clean, neat and does the job. Their Triggering Toolset starts at EUR229 per month for smaller properties, so make sure you look into the potential value for your property before investing.Travel TripperTo Travel Tripper, price check widgets are just one part of "making the actual booking process easy and seamless for the consumer" - an essential concern to those looking to improve direct bookings, says Nancy Huang, Travel Tripper's head of marketing.The Travel Tripper Rate Match tool is a little different. In addition to checking rates, Nancy says, the tool "will also price match any lower rate it finds on a third-party booking site." That way the consumer can be absolutely certain that they're finding the lowest rate on the hotel's own site, and if you've forgotten to adjust your rates on your own site to make them the lowest, the tool can do it for you.Paraty TechParaty Tech is a Spain-based company who offer a booking engine, online marketing and web design. Their Parity Maker is their latest tool, and has most of the features of other price check tools we've seen - plus a little extra.Parity Maker compares and matches rates with OTAs in real time. Then, like Travel Tripper's tool, if the lowest price is not on the hotel's own website, the prices will be modified to change that fact. The prices change right before the user's eyes, giving them a powerful incentive to book immediately.GuestlinePrice Assure is offered as a free tool as a part of Guestline's latest Online Booking Module. Sophie Cartwright at Guestline tells us that Guestline's Price Assure tool allows guests to compare the total cost of their stay on the hotel's website against up to 5 other online channels (the same number as Cloudbeds).When checking room availability, the tool instantly returns results - there's no wait to see the comparable prices. Sophie says that "the widget uses controls within Guestline's software, and is configurable by the property, which can customise the messages that the booker reads." This is convenient for hotels wanting as much flexibility as possible in their price check widget and looking to ensure information is constantly up to date.EveryglobeEveryglobe may technically be a stand alone widget, but they've partnered exclusively with Webhotelier. Since their price check widget is currently exclusively available with the Webhotelier booking engine, we're going to treat it here as part of a larger system.Everyglobe shows a live price comparison on both your hotel website and your booking engine. Here's what it looks like.ConclusionAll of these price check widgets have unique features to offer, and it's likely that some will perform better for your property than others. Ultimately, however, they are all trying to do the same thing: drive direct bookings to your site.When you are developing a book direct strategy, everything that can be done should be done to get guests on your site and keep them there to book. Hotel technology companies know this, so watch this space! It's likely that the market will open up even further than it has in such a short span of time, and it will be interesting to watch and see which tools rise, which fall, and why.

[INFOGRAPHIC] Booking Patterns for Independent Hotels: Who, How and When

Net Affinity 15 February 2016
Net Affinity's booking engine processes and analyses tons of bookings every day. Looking at that data, we realized we're sitting on a whole lot of data on booking patterns. The pile of gold beneath the mountain of numbers. So, we decided to do a little digging to see if we found something shiny.Today, we're sharing, for free, the most interesting booking patterns of the last quarter of a million bookings to go through our booking engine. We're telling you who books, howthey book, and when they book.The most surprising feature, to us, was the fact that over one-fifth of all bookings were made on mobile. That's extremely significant, and way up from where our data had mobile bookings a year ago.Why is it such a big deal? It's one more piece of the puzzle confirming the shouting that every digital marketing blog and company - yes, ours too! - has been doing for the past few years about the mobile revolution.Mobile is important, both in the wider field of travel and for independent hotels. Mobile bookings aren't a phenomenon for big chains or OTAs to claim alone - they're sweeping independent hoteliers too. This is partially due to more hotels making sure their websites are responsive on mobile and optimising for conversions on those devices. It also has to do with technology improving, potential guests getting more comfortable with their phones and tablets, and the many and varied ways there now are to pay on mobile.We've also uncovered booking patterns by age, by gender, by month, and much more. For the rest of the valuable data we dug up in our analysis, check out the infographic.

Increasing Your Conversion Rate: 6 Killer Design Tips | By Taylor Smariga

Net Affinity 11 September 2015
One of the main purposes of your website is to convert visitors into bookings.You want potential guests browsing your site to complete the booking process, turn up at the front desk, and check-in. To do this, your site must have a design that is not only appealing, but highly converting.With that in mind, here are 6 hotel site design tips to help you convert more visitors into guests.Read the full article at blog.netaffinity.com
Article by Maeve Walls

Revenue Management- Hotel Full But Empty Pockets

Net Affinity 10 July 2015
According to a phocuswright white paper:27% of UK guests booked their stays directly on the hotel's website, versus 32% through an OTA,34% of US guests booked their stays directly on the hotel's website, versus 25% through OTA.So although OTA channels are ever present there is not only the capacity to build direct bookings but also the demand for consumers to book direct.So let's delve into the reasons good revenue management helps build direct bookings.5 REASONS WHY REVENUE MANAGEMENT IS CORE TO BUILDING DIRECT BOOKINGS1. SETS A CLEAR GOALSet KPI's to keep the team focused on the overall strategyA key indicator is the profit per channel2. BUILDS KNOWLEDGE ON YOUR CUSTOMERSYou have a wealth of data available so analyse this and gain knowledge of booking patterns per channel and segmentsDecisions will be made with facts and will identify the things that are most profitable to you3. DECISIONS ARE MADE ON FACTStrategic decisions made on facts are much more likely to deliver positive results and are a source of competitive advantageHaving knowledge will allow for a more informed approach4. BUILDS A STRATEGIC PLANYou now have a strategic plan of how to deliver the right bookings through the right channelBased on the information you have collected you will be able to predict consumer behaviour optimise availability and price5. SUPPORTS A COLLABORATIVE SALES APPROACHA clear revenue management approach aims to remove departmental silos with the goal of increasing direct bookings and profitIt gives rise to the sales and reservation teams working together and being fully aware of each department's goal, which is, of course, the same goal isn't it...DATA ANALYSISIdentify where the issues areUnderstanding what the data is really uncovering is crucial to implementing the correct decisions which are focused on the fundamentals of the overall goal - build direct bookings. Your team needs to be able to access and analyse that data at hand. Your P.M.S. and channel manager should provide management reporting applications/tools to automate the deep analysis of bookings per channel so that the end goal can be identified. Remember that the most relevant KPI'S to drive direct bookings are easier to identify when the unique property issues are identified.Understand where bookings are coming from Know and understand what bookings you are getting from each channel. Set out the criteria you want to analyse and compare the findings for each channel. The booking patterns analysis should include but is not limited to the following parameters per channel:What customers book through each channelWhat market segments both through each channelSplit between Midweek Vs Weekend bookingsIdentify the lead in timesWhat is the Length of stay per channelCancellation % per channelPeak booking periods for each channelGeographical breakdown of each channelBookings per channel for dates that are subsequently closed outDenials per channelUnderstand your customers Data analysis of customers is necessary to identify your key customer segments. Different consumers from different market segments and booking channels will be willing to pay different prices. Analysis should include but is not limited to the following parameters:Conversion ratioLead timeAverage Room RateValue propositionsPreferred channels to bookMost popular tariffs bookedTotal revenue spendSize of segmentGeographic location Understand your Opportunities and Gap DatesBusiness intelligence will allow you to identify opportunities in the marketplace. It will also help identify problem dates far in advance so early action can be taken without reducing rates or having flash salesExamine your demand calendar in detail for at least 3 months in advanceDaily Pick up report - review next 6 months in detail and all key demand dates for the next 12 monthsStay controls & restrictions. Monitor and measure the source of all bookings on your close out datesBenchmarking, bear in mind: price, product, location, serviceInvest in a rate shopping if necessary. Monitor your competition and overall market prices you find dates where you have an opportunity to grow your rateMarket share reportsSETTING THE RIGHT GOALS (KPI's)Are you looking at the right KPI's?Once you know what issues you are facing you can then set the most relevant KPI's you need to achieve your goal and build direct bookings. The actionable decisions being made and implemented are then based on the KPI results. It should always be based on the end goal instead of making reactionary decisions. You have to be clear about the end goal and then set relevant KPI's to measure how effective the change in strategy is. With the goal specifically to build direct booking you should be looking at these 4 categories:Hotel Website TrafficMeasure traffic per sourceMeasure traffic per deviceMeasure ratio of New v Returning visitors to the websiteMeasure traffic per locationHotel Website Conversion rateThe conversion rate of visitors to bookersThe conversion rate of searches to bookersDon't forget - Look at the drop off points in the sale funnelIdentify the key pages at the start of the search funnelBookings per channel:Set a target for direct bookings especially on key demand datesMaximum bookings through each other channelProfit per channelNet ABV per channelNet ARR per channelMax commission you are willing to pay daily - link these to rate bands if possibleNote: ReviewPro analysis showed commission costs growing at twice the rate of total revenue in 2014 IMPLEMENT STRATEGIC PLANThe implementation of the revenue management strategy should be viewed as the most important of hotel operations. It can be a change in work practice and thought process. All team members have to buy into it, to be fully committed to it - from top to bottom and everyone in between.Strategic elements which need to be considered when implementing your revenue management strategy include but are not limited to:Control of Inventory:Having first room availability on your own siteMLOS restrictions on higher cost channels on key demand datesClosed to arrival restrictions for OTA channelsLimited / closed availability on high cost channels for high demand datesBe clear about what differentiates each room typeDynamic Pricing Strategies:Identify what different segments price points areUnderstand customers reason for travel - it affects the they are willing to payDon't overload with package options, the more choice the more confusionSale and discounted rates should be exclusive to hotel site and promoted as suchOnly have BAR rates on other channelsMonitor market conditions these will have an effect on price elasticityReview reputation especially compared to local competition effects rate capacity on some channels - use Tripadvisor as a gauge of how customers are likely to view propertyPresent the customer with a compelling reasons to book direct, best price promise direct, add benefits and value for booking direct - express check-in, free Wifi, etc.Note: A Trip Tease recent survey found 72% of people would book directly with the hotel if they could be sure they were getting the best deal.Online marketing planThe collaboration with marketing becomes crucial at this point, as the online marketing active needs to reflect the goals of revenue strategyDuring this book direct course we will be looking at all things online marketing and covering all topics needed for a successful online marketing plan.Don't forget - KPI's need to be reviewed on a regular basis to ensure the strategy is on track and growth is visible.SUMMARYHoteliers need to realise the potential of their revenue managers, of the true value they hold and how they control one of the core revenue sources for a hotel. They need to be afforded the resources to carry out their role to its fullest. Have you ever seen a chef go without essential equipment to make their job efficient? For a revenue manager to sell the idea that a channel manager system or business intelligence tools are necessary to improving the efficacy of the department can be much more difficult.Remember it start outs with thorough data analysis on bookings, customers and the opportunities in the marketing place. Knowledge from data analysis enabling relevant KPI's to be set and implementation of the plan based on the goals.Hotels do need to work harder than ever to build their own bookings, work that done correctly is well worth it - financially!

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