Ushuaia Ibiza: Delivering A Rock Star Revenue Strategy

REVENUE MANAGEMENT

Take a standard three-star hotel operating largely on tour operator exclusive agreements and reinvent it as a five-star beach resort and club, hosting the world’s leading DJs. This is what Palladium Hotel Group did when it created its Ushuaïa brand in Ibiza. However, to ensure success, Ushuaïa needed to undergo a digital conversion, as well as a physical one.

Why it matters: Alongside converting the asset, the senior management team at Palladium realised that it also needed to redefine the distribution strategy for the property.

As a three-star tour operator led hotel the property had been achieving around €50 per person per night peak season. But as a five-star super-club it could achieve much more.

Top 3 Core Objectives: The Palladium revenue team worked to diversify the hotel’s distribution strategy, developing its eCommerce strategy, using online travel agents (OTAs) and pushing its direct channel. An integrated tech stack was integral to the transformation, with Duetto helping the team to optimise the hotel’s distribution strategy.

Improve Guestroom Segmentation: Different room types were created, including ones with open terraces that overlook the club area. Room categories such as the Oh My God suite and the Rock Star suite enabled the hotel to use room type differentials in its pricing strategy.
Diversify Distribution: A diversified distribution strategy enabled the hotel to work with a greater number of partners as well as increase conversion on its own direct distribution channel. The new distribution strategy also gave Palladium better control of its inventory and pricing strategy.
Dynamic Pricing Structure: A refined Open Pricing strategy enabled the hotel to move away from static rate contracts and fully embrace dynamic pricing.

Innovators Mentioned

Palladium Hotel Group

Duetto

Sergio Zertuche

Chief Sales and Marketing Officer, Palladium Hotel Group

Palladium Hotel Group

Diego Fernández

Corporate Revenue Director, Palladium Hotel Group.

Palladium Hotel Group

"Duetto helps us to optimize the distribution strategy, in order to give added value and drive the brand promise that we offer to the asset."

Sergio Zertuche

Chief Sales and Marketing Officer, Palladium Hotel Group

👍 Chief Sales and Marketing Officer, Palladium Hotel Group Sergio Zertuche said that an optimized distribution strategy ensures pricing and product are aligned.:

"Duetto helps us to optimize the distribution strategy, in order to give added value and drive the brand promise that we offer to the asset."

⚖️ The selection process: During their research process, Diego Fernández evaluated Duetto's product differentiators, customer support, and holistic value as a strategic partner and ultimately decided that Duetto was the best fit solution:

Corporate Revenue Director, Palladium Hotel Group. Diego Fernández said, about their decision: "Since we started with Duetto, we are more agile in taking decisions, and these decisions are better decisions, because we have more data."

📈 The results: From €50 per person per night, the conversion and new distribution strategy saw rates increase by up to 10 times, with peak season rooms yielding at €500 per person per night.

Increased revenue: ADR +3.5% RevPAR +6%
Changing out the distribution mix proved a real game-changer, with the hotel moving from 90% tour operator distribution to 90% of its distribution now yielding through OTAs and its direct channels.
Years after its transformation, the revenue team continues to operate a dynamic distribution strategy, keeping channels open and yielding on price and packages to maximise on profits.