Of Battlegrounds, New Channels and the Need for the Right StrategyBy Vera Lye - Contributing Editor, APAC at Duetto
Over a couple of beautiful winter days Down Under, hotel practitioners gathered at the Sydney Exhibition Centre at the No Vacancy Accommodation Expo 2018 to listen to experts discuss changing trends and challenges faced by the industry.
In such company, a discussion about the battlefield with new soldiers will inevitably ensue. This time was no different. The hospitality distribution chain was once again described as a "battleground" - a fight for customers and for ownership of those customers. A panel, entitled "Airbnb vs. hotels vs. OTAs," looking at the upsides and the downsides of the distribution landscape, started off with an astounding prediction - by 2030, Airbnb will be the largest revenue turnover accommodation provider.
Not a totally left-field prediction if you take into consideration what Airbnb has already begun to do. With its recent partnership with SiteMinder, it now has access to the latter's listing of 35,000 hotels.
In an earlier statement, SiteMinder's managing director and founder Mike Ford said, "In an increasingly-complex and competitive world, SiteMinder's partnership with Airbnb offers a new opportunity for boutique hotels and bed and breakfasts to engage the growing number of travellers who seek exceptional hospitality and an authentic local experience … now makes it easy for these small accommodation providers to reach the millions of customers who use Airbnb every day."
Hotels like Sydney's Old Clare Hotel has already jumped on the Airbnb bandwagon and is featured in its boutique hotel list. "We wanted to explore an additional market, a new demand channel made up of people who are not looking for a traditional hotel. Airbnb customers are different," explained general manager Timo Bures about its decision to list with Airbnb.
VERIU Hotels & Suites is also on there. Marta Laguardia, its revenue manager, said the process of distributing through Airbnb is improving. "We used to have to upload our rates manually; Airbnb didn't provide any tools. But now, there are some, although still limited."
So how big a threat is Airbnb to the current distribution chain? "There is no need for fear. If you have a value proposition, then you shouldn't be fearful of the growth of any distribution channel. Have a product that you are proud of and that people desire. Look at your product and focus on improving operations and services, and make your product more desirable than, say, an apartment. It is better to do that than spend money on public relations against guys like Airbnb," advised Bures.
Moana Heal, group revenue and distribution manager of Wyndham Hotel Group, put it in perspective. "Airbnb is not as big a threat as people think. At the recent Commonwealth Games in Brisbane, a lot of the Airbnb listing was not sold. But hotels mostly did well, experiencing 15-20% higher occupancy."
However, a warning was given to the OTAs that typically charge a commission rate that is higher than Airbnb. If Airbnb starts providing the same tools to hotels that OTAs now provide, OTAs could be under threat, said Laguardia.
High commission rates being charged for distribution is another familiar refrain. "What's driving rates up is that a few of them are becoming bigger and bigger. Ctrip, Amazon, Google are some that are starting to throw their weight around in travel," said Dai Williams, senior vice president of global partnerships at SiteMinder.
With the complexity of distribution increasing with each new and emerging channel, how much more important does that make revenue management and strategy?
It was clear from the panel that sat to discuss revenue management and how it can be harnessed for optimal revenue and profit performance that this is a discipline that hotels can ill afford to forgo.
"We are in the cusp of change. We need to have a Revenue Strategy that looks at more data points and consider transforming the e-commerce experience to derive the right price. We should integrate all silos within the hotel to work towards the same goal," suggested The Grace Hotel's revenue manager Sawaid Saeed.
"In the past, we were working with a set demand. Now, it is more about generating demand. Revenue leaders should now be assisting in bringing the demand instead," he added.
The panelists agreed that hotels need to put in more concerted effort to hold on to the customer and not "give too much away".
Sawaid suggested using OTAs as billboards but complete the booking directly. Clare Coyle, director of revenue and distribution at DOMA Hotels agreed.
"Participate in sale activities by OTAs. Use them to do marketing, but provide more ancillaries or flexible terms to attract direct bookings," said Coyle.
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Vera has been a travel trade journalist in Asia/Pacific for two decades, working in most of the major trade publications. She is now based in Sydney where she juggles her writing with managing her young son’s development as an aspiring tennis professional.
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