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Is the Future of Revenue Management Humanless?

by
Jan Hejny
2 months ago

According to McKinsey, AI-based pricing can deliver between $259.1B to $500B in global market value. But the critical question remains: can Revenue Management be completely automated? The answer is: theoretically, yes, but, in practice, things are a little more nuanced. But let's step back for a second and try to reword the original question, at least slightly: should Revenue Management be completely automated? The answer, in this case, is a big, resonating, capital letter YES. A recent study by MIT-BHI showed that companies that “undertook AI-driven pricing transformations achieved more than $100 million of revenue improvement 70% more often than companies that focused on another area”. "Self-learning algorithms are evolving fast, becoming highly sophisticated, and they already have a high impact on operational efficiencies and increased yield. As a result, there is no doubt that the future of revenue management will be fully automated," says Alexander Edström, CEO, Atomize. The pieces of evidence are all around us, and not only in travel. Some examples? Amazon uses artificial intelligence to drive dynamic pricing; Starbucks adopts predictive analytics based on its data from over 90 million weekly transactions, and multinationals such as Coca-Cola or Johnson & Johnson have been using AI pricing for years. During the 2019 edition of the Revenue Management & Pricing in Services Conference, hosted by the prestigious Ecole hôtelière de Lausanne, Kevin Hof, Data Scientist at RoomPriceGenie, shared several case studies where hotels experienced an average of 22% increase in revenue by adopting RMSs, and similar results can be found on dozens of similar publications. "The hospitality industry is very fragmented when it comes to tech adoption and AI implementation in revenue management. Many hoteliers are still very protective of their own pricing and strategy; they believe that their historical knowledge and gut feelings know better than any algorithm. The truth is: that they don't trust what they don't necessarily know, understand, and cannot control (like a Human Revenue Manager). That's when tech Vs. human becomes a dilemma, and that's when we need to go back to basics and work on the "tech it easy:" step by step education followed by measurable results. Revenue Management is a hybrid human+tech cooperation, and the future is already now," says Silvia Cantarella, Commercial Strategy Expert & Founder Revenue Acrobats.

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How Nationwide Hotel Management Outmaneuvers the Competition with Decision Intelligence

by
Hotel Tech Report
3 months ago

How can data unlock decision intelligence and help your hotel stand out from the pack? The pandemic made hoteliers reconsider many aspects of their operations, and perhaps you’ve also had to figure out creative ways to do more with fewer employees or with less budget. As you navigate this new world, one of the most critical inputs to your decisions should be reliable, timely data about your reservations, your guests, and your financial performance. As you’ll learn in this article, real-time data can unlock better decision-making at all levels of your organization. We talked with Robert Goad, the Senior Vice President of Revenue Management at Nationwide Hotel Management Company, which operates roughly 120 Woodspring Suites hotels across the United States. The Woodspring Suites brand, which is part of the Choice Hotels umbrella of brands, sits within the economy extended stay segment and attracts guests who stay anywhere from one night to many months, which presents unique operational challenges, especially during and after the pandemic. Robert and his team have partnered with HotelIQ to develop a strong culture of decision intelligence and real-time data, which we’ll dig into in this article. Whether you operate one hotel or a hundred, or if you have a team of 10 or one-thousand people, you can take some nuggets of wisdom from our interview with Robert to improve decision intelligence in your own business. These principles can help your team harness the power of data, make decisions more quickly, and achieve better revenue and occupancy performance while keeping costs low.

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3 Tips for Attracting Maximum Market Demand

by
Julia Rey
3 months ago

The hotel industry has undergone drastic changes globally in the last two years, having to deal with uncertainty, ADR swings, increased last minute bookings and cancellations. Revenue Managers have been forced to find strategies to deal with this new paradigm and in many cases have had to readjust their planning. Here are 3 tips that can help you redefine your revenue management strategies for the next quarter: Review and redefine Segmentation Take a look at the key dates in your Demand Calendar Make sure you have an efficient Rate Structure   Review and Redefine Segmentation The basis of good segmentation work is the identification of groups of consumers who respond similarly to marketing strategies. The effectiveness of segmentation depends on how well these groups are differentiated and measurable by their behaviour.  The ideal is to start by identifying macro segments such as transient and groups, then dividing those segments into smaller groups that are relevant for your business and measurable. The more detailed the segmentation, the more you can get out of it, but don't break it down so much that it is more costly to extract behavioural data than the benefit of having the information. Consider yieldability for every market segment: can we work with dynamic pricing in this segment, or is it a contracted rates type of segment? (leisure, business dynamic, business FIT, etc) Channel segmentation is also key to understand where your bookings are coming from, so for every market segment, you should be able to identify what is the main channel: direct, OTA’s, Tour Operators, GDS, etc. Reviewing this double segmentation, and configuring it correctly in your RMS will lead to an optimization of your strategy and revenue management procedures towards personalization.   Take a Look at the Key Dates in Your Demand Calendar Once the market and channel segments are reviewed, we must study the expected demand for each period by setting up a demand calendar. To do this, we must identify “day types” according to events or circumstances that we know in advance and affect the demand. There will be days of high demand, medium demand and low demand. Then we will define the minimum selling price for each day type: in high demand days we can start selling at a higher price than in low demand days. When setting day types, it is important to make comparisons between similar dates in terms of demand behaviour. If we identify a specific date in the past that we can compare with a present date, then we can have an idea of what to expect from our segments. This is what we call correlation dates, and if we are using a RMS, we need to tell the system how to compare dates, so that the proper correlation is included in the algorithm and you can have your RevPAR maximized.   Make Sure You Have an Efficient Rate Structure Finally, you will need to create an efficient rate structure to reach your potential customers in every segment and therefore optimise your income. Use different types of rates that are aligned with your segmentation (flexible rate, qualified rates, negotiated rates, etc.) Then, offer different selling conditions to every segment by using rate fences (CTA, MLOS and other restrictions), and avoiding cannibalization of rates, that is, not to stop selling a rate which is profitable for us, because the demand can access a more advantageous offer. The difference between one rate and another has to be a benefit for the hotel and an advantage for the customer, so that all interesting segments are attracted to our product and profitable for the company. On the other hand, it is highly recommended that you work with open rates, if your tech stack allows it. This means not having pre-set price levels, but instead prices can move freely without following rules or ranges. This allows a tighter adaptation to the market, since the optimal price can be found between two price levels. When creating or reviewing your rate structure, the first step is to think over room types and meal plans. To do this you have to define the generic room types available, the different occupancies that each room type admits, the additional attributes that can be added with supplements, and the types of meal plan you want to work with. A second step would be to set your cancellation policies. The cancellation clauses that may apply and the cost associated to each of them must be defined. Moving forward, you need to think over the restrictions. It is necessary to decide which ones to use and what conditions must be met for them to be applied.  With all these elements defined you can build your rate plans. In short, the rate plan refers to a room type, with a specific occupancy and differentiating attributes, a meal plan, cancellation policy and restrictions. And the price of each rate plan will depend on factors such as the moment of the reservation or the existing demand for the stay period.   Lastly, don’t forget to define additional services that can increase the rate as an add-on to the reservation, or as ancillary revenues during the stay. This is key to increasing your revenues not only from the rooms division, but also from the rest of the touch points of the guest journey.  

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How to Easily Manage and Distribute Your Hotel Content Across Demand Partners Using Content.AI

by
Hotel Tech Report
5 months ago

Prior to the pandemic, travel bookings were abundant which led to many hoteliers becoming complacent in their distribution strategies.  As bookings dried up, hotels needed to get more creative about how and where they generated demand from.  Many of the savviest hoteliers began optimizing their content across 3rd party distribution channels to drive more visibility and increase conversion by standing out from the compset - but with so many channels out there the task has become unmanageable (especially with labor shortages). Managing digital content, like amenity information, descriptions, and photos, is an important component of any online hotel content distribution strategy. And far too often, it gets deprioritized in favor of what seem like more urgent tasks. Great content is the key to travel and accommodations bookings.  All else equal, hotels who display the best and most accurate content to 3rd party channels will receive the most bookings.  Airbnb co-founder Joe Gebbia credits the firm’s early success to a strategic shift in content distribution.  After the startup implemented a strategy to display better content, Airbnb doubled it’s revenue within a week.  While your hotel may not double revenue in a week like Airbnb, there are massive gains to be had by optimizing your content distribution tools and strategy. What if we told you that there’s a way to optimize your content using automated tools without needing to hire a team or take hours out of your already slammed schedule? In this article, we’ll explain why it’s so important to maintain correct, complete, and consistent content, and explore how Content.AI by RateGain addresses  the common pain points of content distribution. 

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How to Prepare Your Hotel Budget in 8 Steps

by
Hotel Tech Report
5 months ago

Whether you're a general manager, sales manager, marketer or revenue manager - everyone has felt the pains of budgeting season.  This stressful time of year has become even more stressful in the wake of the pandemic which has rattled the hotel business and made planning for the future an impossible task. Ever wish you could peer into the future and see what your hotel’s occupancy or RevPAR will be a year from now? We don’t have a crystal ball, but preparing a solid budget for your hotel is the next best thing. If you’ve never set a budget, or if the words “budget season” bring back bad memories of hours spent huddled over spreadsheets in a conference room, then you’ve come to the right place. Preparing your hotel budget doesn’t need to be painful; in fact, it can be a valuable exercise to assess the current state of affairs and to brainstorm about your goals for the future. In this article, we’ve distilled the hospitality industry budgeting process into 8 steps. While it might be easier said than done, these steps can help you find synergy with other departments during the process and set a budget that takes into consideration a variety of internal and external factors. Let’s get started!

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How to Build a Data Driven Culture at Your Hotel Organization

by
Hotel Tech Report
5 months ago

Are you wondering how to make better decisions at your hotel? Have you heard about the benefits of a data-driven culture, but you’re feeling unsure of how to change the mindset at your property? Building a data-driven culture is challenging, and it’s normal to feel overwhelmed, especially when faced with talent shortages, teams that operate in silos, and a lack of guidance about incorporating data into hospitality businesses. But it is indeed possible to shift your organization’s culture to be one where data is accessible and actionable, and where decisions are driven not by the highest paid person’s opinion, but by hard data. In such a culture, decisions can be made more efficiently and confidently, and employees at all levels of seniority feel valued. In this article, we’ll explain the benefits of a data-driven culture and how you can transform your hotel organization to one that encourages collaboration and makes better decisions.   Advantages of a Data-Driven Culture Simply storing guest information in a database doesn’t automatically make your organization “data-driven,” and it’s what you do with the data that counts. But why bother digging into that database? Organizations with data-driven cultures can realize three main benefits: Deeper understanding of performance. Did we sell out? Did we surpass last month’s RevPAR? Did we compress the booking window too much? Data can help you answer these questions and more, giving you new insights that can help you monitor progress and achieve your goals. More efficient decision-making. Imagine you’re in a meeting with department heads, brainstorming ways to hit budget for next month. You might throw around dozens of ideas, but without really knowing the root cause of the lag in performance, you go through pros and cons of various initiatives, and quite often the decision is made on instinct rather than on data. Instead of taking this circuitous route to a decision, data can help you pinpoint where exactly you need to improve, which expedites the decision making process. Increased coordination between employees and teams. With quick data sharing, an organization can speed up feedback cycles.  Waiting for quarterly business reviews to work across teams and properties means that by the time your counterparts understand the data - it's already out of date.  Coordination between teams is facilitated by real-time digital sharing. It’s important to remember that although “data-driven culture” might sound like a buzzword, it’s not a passing trend. Adopting a culture rooted in data shouldn’t be treated like a temporary experiment or an excuse for gathering data that you don’t intend to use. Be mindful that the overarching goal of collecting data is to leverage it to make better decisions, foster collaboration, and keep tabs on performance.   Start by Removing Friction in Data Collection Let’s take a step back; before you can encourage your employees to embrace data and use it to make decisions, you need to ensure your data is readily available. If your staff need to jump through hoops to find the metrics they want to use, then you’re going to see minimal adoption of a data-driven mindset.   HotelIQ's Decision Cloud facilitates cross-functional hotel data sharing   With the goal of using data to make better decisions, we recommend assessing the availability of your data. Start by determining key areas where data is collected and analyzed. At many hotels, this will be the property management system. Does your PMS have ready-made dashboards or tools to see insights in real-time? If so, great! Otherwise, you’ll want to invest in business intelligence software like HotelIQ that will help you synthesize the data gathered in your PMS in as close to real-time as possible.  “I previously didn't consider myself data savvy. Many programs require pulling and cross referencing of multiple reports to solve a problem and provide the analysis you're looking for. This was time consuming and left me feeling ill-equipped. I would sharpen your excel skills heavily or find a program that has more versatility. HotelIQ has reports conducive to our needs already set up, but furthermore those reports can be repurposed past their intention to find answers and areas of opportunity,” says Cara Gilbert, Revenue Analytics Manager at the Intercontinental New York Times Square. Any lag between events happening and data showing up in your dashboard could cause missed opportunities for data-driven decisions that would improve performance. For example, if you’re approaching a busy weekend, you’ll want to keep a close eye on occupancy and ADR leading up to that weekend; if the data hits your system after the weekend has passed, you’ve missed the boat. Although hotels may be slower than other organizations to welcome data, your employees are likely already handling data in other areas of their lives, which is a promising sign, as HotelIQ’s Sameer Umar sums up:  “For years hoteliers have relied on their knowledge of the market and gut feeling. While those still matter, human instincts work best when coupled with timely and reliable intelligence. You need to keep your finger on the pulse so as to avoid any (more) unpleasant surprises. Downloading data into spreadsheets and emailing each other is a good way for people to fill their days but it fails at ensuring timely realization of opportunities and threats. Not to mention the many different versions of the truth that float around in inboxes thanks to human error and/or differences in timing of data extraction etc. We live in a world where streaming data and AI are already a part of our day to day lives. They should be incorporated into our digital workspace as well.”   Create a Culture of Transparency and Collaboration Adopting a data-driven culture can increase transparency and collaboration at all levels of the organization. Numbers don’t lie; metrics can tell you exactly how your hotel is performing without sugarcoating anything. In addition, numbers aren’t political. As Rob Casper, JP Morgan’s Chief Data Officer explains, “If everybody sees what everybody else is doing, then the great ideas tend to rise to the top and the bad ideas tend to fall away.” In hotels, which are hierarchical by nature, reliance on data rather than seniority in decision making can help all employees feel more equal. So how do you achieve a transparent, collaborative environment at your hotel? First, tear down silos by sharing metrics publicly and digitally so everybody can access the same reporting. For example, revenue managers should have visibility into ad spend, and marketing staff should have visibility into booking pace. Next, make sure that you’re measuring the right metrics. Successful organizations avoid “vanity metrics” that don’t holistically track performance, and they don’t hide data that reflects poorly on their performance. Encouraging everyone to share (and trust) the right metrics will help you catch red flags early and prevent further poor performance.     Develop Data Literacy at all Levels of Your Commercial Organization If you’re determined to turn your hotel business into a data-driven one, do you have to replace your front desk agents with data scientists from tech companies? As Sameer illustrates:  “You don’t have to find data scientists with PhDs in Statistics and Economics. But you do need marketers that can explain the correlation between online searches, shopping cart abandonment, and booking patterns across channels and markets. You need sales people who work out of the CRM and know which customer(s) to contact when. You need revenue managers who stay on top of market trends and won’t drop your rates the minute booking pace dips. You need an operations team that’s constantly incorporating guest feedback to enhance the stay experience. In short, you need data-driven hoteliers.” Your hotel’s staff should remain hoteliers first; no amount of number-crunching can substitute for a friendly face at the front desk or a beautifully executed event in your ballroom. But your team should be passionate about leveraging data to achieve their goals, whether those goals are related to RevPAR, review scores, or repeat bookings. Making metrics checks a routine part of department meetings and performance reviews will help your team get more comfortable with data and showcase how monitoring performance can help them hit their targets.   Make Your Organization's Data FAIR (Findable, Accessible, Interoperable, Reusable) By now, you’re probably excited about all the upsides to a data-driven culture in your hotel organization. As you think about how to adopt good data practices, we recommend keeping the FAIR guiding principles in mind. These principles ensure your data is: Findable: The data has clear and consistent identifiers and metadata. For example, all of your check-in dates should be labeled with a field like “Reservation Check-In Date” rather than “CID” or something that’s not instinctual. Accessible: The data can be accessed by any user, at any time, with the relevant authentication and authorization. If you pull data from third-party sources, for example, like STR or Kalibri Labs, the data should be available without needing to enter additional passwords. Interoperable: The data is integrated with other relevant data. For instance, your database of guest email addresses should be connected to your reservation database and your restaurant’s point-of-sale system so you can connect email addresses with reservation dates, room types, restaurant checks, and more. Reusable: The data should be able to be replicated or combined in different areas. If you want to pull one report that shows guest email addresses and room types, and another report that shows guest email addresses and restaurant check values, you shouldn’t need to pull your email address data twice. Sameer nicely puts FAIR principles into a hotel context:  “The cleanliness of your data is just as important as the cleanliness of your rooms...these data fields need to be clearly defined in operational systems, you need to have consistent data standards for them, staff needs to be trained to follow these standards, and data quality needs to be tracked and incentivized. Else, it’s ‘garbage in, garbage out’ and you have nothing to go on but gut-feeling.” The benefits of integrating various data sources, while keeping FAIR principles in mind, are especially relevant for hoteliers that pull value from their own systems (like your PMS) in addition to third-party sources (like STR). Connecting the two data sources can unlock even more insights. For instance, if you can benchmark your own channel mix against STR’s Market Penetration Index, you can better assess whether you have a healthy mix of channels or if you need to focus on one segment in particular. Ready to work toward a data-driven culture at your hotel? There’s no better time to start to realize benefits like increased transparency, tighter collaboration, and better decision-making. Finally, you’ll need a digital workspace where employees can collaborate. Data-driven culture doesn’t equal meeting-heavy culture; in order to be efficient, your teams should be able to access data on demand. In this digital workspace, anyone on the team should be able to plan, share, track, and comment on reports or initiatives to achieve maximum transparency and collaborative power.   This content was created collaboratively by HotelIQ and Hotel Tech Report  

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How Hotel Tech Can Help with Labor Shortages

by
Sarah Duguay
5 months ago

As travel opens up, so comes a surge of travel. Pent-up desire for holidays has resulted in what some are calling ‘revenge travel.’ After some hesitation, hoteliers are reporting more demand than ever since the beginning of the pandemic. This has resulted in a challenging scenario. Before COVID-19, the hospitality industry was no stranger to employee retention and acquisition issues. But suddenly, faced with low bookings, many hotels had to make the difficult decision to lay off staff. Fast forward to today, some hotels have been forced to turn away guests because of even greater staff shortages than before. While theories abound about shortages, accompanied by HR strategies to attract new hotel employees, we’re here to remind you to take a deep breath because hotel tech is here to help! Tried and true, existing hotel tech can help your hotel with labor shortages by making operations more efficient and less time-consuming while improving the guest experience.   PMS Features and Integrations Alleviate Hotel Labor Shortages According to Revinate, 95% of hoteliers are facing a staff shortage while occupancy is experiencing record highs. One hotel in their report said their shortage has them operating with only 70-75% of their staffing levels. This is the norm, not the outlier, in today’s market. But, as many independent hotels learned during the pandemic, those with a cloud-based property management system (PMS) already have a leg-up on their ability to streamline operations and maximize staff. Because, as the name implies, cloud-based PMS exist in the ‘cloud’ (they run online), operators can manage their hotels from anywhere at any time. Hotel managers no longer need to drop everything and dash back to the hotel to deal with accounting issues or make rate changes. Front-desk duties, such as group management and availability calendars, or back-office tasks, like rate management and financials, are all at your fingertips, wherever you are.   Automation. Nothing streamlines operations like automated systems! At the heart of operations, the PMS automatically coordinates reservations, inventory and availability, housekeeping, and reporting, centralizing data to streamline front- and back-office tasks. For example, instead of manually sending routine emails to guests, set up and send templated emails from your PMS automatically based on defined triggers for booking confirmation, pre-arrival, check-in and post-stay communications, waitlists, group bookings, rental agreements, and more.  A cloud PMS is easily integrated with your other hotel systems — including payment gateways, OTAs, point-of-sale systems, locking systems, CRMs, and revenue management software, etc. — to automatically share relevant reservation data with those systems so that staff don’t have to manually re-enter information into multiple systems. System integration with your PMS at the core is an important part of automating processes and maximizing efficiency.   Self Check-in: Let guests jump the queue with online registration and self check-ins — saving you time and resources in the process. Typically, hotel guest check-ins — with forms to sign and policies to review — take around five minutes per guest and often result in queues, occupying your front desk staff and frustrating guests. By moving this process online, all agreements, waivers, screening, and guest information collection is completed online by your guests in advance of arriving at the hotel, improving the guest experience by not having to wait in a physical queue, while simultaneously saving staff a lot of time! With automated email or SMS communications, payment gateway and mobile key integration, the entire check-in process can be automated.   Rate Management: Flexible rate management tools make monitoring and adjusting pricing a cinch, from creating group discounts and package rates to instant overrides. Yield management functionality allows you to automatically adjust prices based on predetermined occupancy rules — talk about a time saver! If you haven’t already added a commission-free online booking engine (OBE) to your property’s website, this is your first order of business. Integrated with the PMS, reservations made by guests using the OBE are automatically updated in the PMS, and live rates and availability are always displayed online. Not only will you save valuable employee time from taking reservations by phone and email but today’s guests expect (and many even prefer) to book online. While OTAs are a great way for guests to find you and book online, why not offer your own online bookings and save on commissions? Speaking of OTAs, you’ll also save time by integrating your OTA channels or channel manager with your PMS to synchronize live inventory, rates and availability across channels, instead of managing each separately. Plus, all reservations coming through your channel partners are automatically updated in your PMS so no matter where guests book, they always have access to up-to-date availability. Integrating your PMS with your online distribution channels is a must for maximizing time and preventing overbooking.    Housekeeping reports: While a PMS cannot perform housekeeping duties, it can make housekeeping processes more efficient, which is essential with a lean staff. With a mobile housekeeping report, staff can check their housekeeping schedule using their own mobile phones, to see which rooms are vacated and ready to be cleaned and to mark rooms as clean as they go, adding housekeeping notes and maintenance alarms as required. The front desk is kept in the loop in real time with the same system. Furthermore, checklists for each room keep staff on track to ensure nothing is overlooked — because as you know, when it comes to cleanliness, guest standards are higher than ever before due to the pandemic.   Mobile keys: Keyless entry is an elegant accompaniment to online registrations and check-ins. While it may seem small, keyless entry technology removes the headache of keys altogether, whether it’s actual keys or cards. No more sanitizing, organizing, re-setting, or distributing. With keyless entry system integration with your PMS, guests can simply unlock their room door with their mobile device. Along with online check-ins, keyless entry integration allows guests to bypass the front desk altogether! Imagine no guest lineups at the designated check-in time and no key drop-offs at check-out. Did we just hear a sigh of relief?   Save time, resources, and money by employing smart room technologies. Allowing guests to adjust room temperature and lighting with their phones puts comfort into the palm of their hands. Better still, IoT offers the ultimate in personalization with room light levels that adjust with the time of day, and keeps the room temperature at exactly the right level — automatically. This kind of efficiency decreases demand on housekeeping and maintenance teams and helps with your sustainability initiatives.    Chatbots: Hotel Chatbots are an excellent way to assist your online guests 24/7 without any extra effort from staff. Integrated with your hotel's website and/or within your guest messaging app, an AI or rules-based chatbot can assist guests with booking, requests, FAQs, upsells, and local recommendations. Younger generations are the most comfortable seeking help from chatbots, with many guests preferring to search for answers this way than connecting with a real human — which frees up your human employees for in-person help.   Robot room service: A couple of years ago, robot room service was exclusively seen as a novelty service to delight guests. But in the age of COVID-19, it’s obvious to see the practical utility of employing robots by reducing human contact (and thus germs) and by reducing the need for bellhops. Because labor shortage is a trend that existed even before the pandemic hit, perhaps investing in robot room service is no longer pie in the sky. Isn’t technology an amazing thing? Instead of providing a lack of care or impersonal service (a common fear about using technology), today’s hotel tech provides hoteliers with a way to upgrade the guest experience even in the face of decreased staffing. If your property does not have one already, a robust and innovative cloud PMS like WebRezPro can set you on the path toward hospitality excellence and higher revenue, not to mention less stress.  

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What is Rate Parity in the Hotel Industry?

by
Hotel Tech Report
1 month ago

If you’ve sold rooms through online travel agencies, chances are you’ve received a stern email from at least one of those channels alerting you about some rooms at your hotel available on a competitor OTA or on your hotel's booking engine at a lower rate.  OTAs like Expedia often lock hotels into a guarantee that they will never offer a lower price on other channels - including their own! Maybe the email to your revenue management team said you were “in breach of rate parity clauses,” but what does hotel rate parity really mean? If you want to get the most out of your third-party distribution partnerships while still driving direct reservations, you’ll need to understand the ins and outs of rate parity to be able to maximize both sources of business. In this article, we’ll explain exactly what rate parity means, how it impacts your channel management strategy, why it matters, and how you can continue to build your direct channel while maintaining a good standing on the OTAs.

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Impala’s New Contracting Product, Agile Distribution Strategy and the Future of Travel

by
Hotel Tech Report
5 months ago

Top hospitality innovators have become agile in every facet of their businesses.  Top hotel marketers are diversifying digital spend to ensure the lowest possible cost per acquisition, the best sales reps are becoming less reliant on concentrated corporate business by building strategies to attract diversified pools of small group business, and the best revenue managers are constantly seeking new ways to experiment with their distribution mix to optimize for profitability. In this article, we’re going to focus on a new tool that helps agile revenue managers cut out distribution middlemen and access new demand channels that were previously too expensive and time-consuming to experiment with. We’ll explain how Impala’s new contracting product is empowering forward-thinking commercial leaders to capture new guest segments and take control of their distribution strategies.  The best part? You can list your hotel free today.   Why Hospitality Leaders Should Bring Agile Methodology into Their Commercial Operations Complacency has historically led to the death of once-great tech companies like Xerox and Kodak.  When successful companies like Amazon and Facebook grow, they work hard to retain their original startup mentality and never get comfortable with the status quo. They’re always questioning what they do (and why they do it) and they’re constantly searching for new opportunities or more efficient ways to operate. They test tons of new ideas to quickly cut failed experiments and double down on successful ones. This operational framework is called “agile management.” Iterative or agile life cycles are composed of several iterations or incremental steps towards the completion of a project. Iterative approaches are frequently used in software development projects to promote velocity and adaptability since the benefit of iteration is that you can adjust as you go along rather than following a linear path. One of the aims of an agile or iterative approach is to release benefits throughout the process rather than only at the end. At the core, agile projects should exhibit central values and behaviors of trust, flexibility, empowerment, and collaboration. Impala allows revenue managers to experiment with tons of new channels at very low cost: both financial cost, since you will be in full control of your discounts and commission rates, and time, since Impala eliminates the need for legwork like contracting connectivity setup, and extensive training. With Impala, your hotel can try a variety of new channels that target different guest segments. Eventually, this cycle of creating hypotheses, connecting to new channels, measuring success, and finding takeaways will become a habit and allow your hotel to identify new pockets of demand with zero upfront cost and minimal time invested.   How Impala Enables Commercial Leaders to Implement Agile Methodology There are millions of parties globally who sell hotel rooms but don’t have access to proprietary inventory.  Historically, these kinds of platforms have had two key ways to sell hotel inventory: OTA affiliate networks (e.g. Expedia Affiliate network) and bed banks.  Impala has built a platform that empowers hotels to connect directly with distribution partners. Impala’s platform is designed to provide hoteliers with the ability to decide where (and when) exclusive rates are shown in a scalable but controlled way.  If a hotel wanted to connect with a new supplier like TripFactory or National Park Express before Impala, they’d need to reach out to that supplier and gather information then decide (using limited information) whether the supplier could generate enough demand to warrant an exclusive rate.  The majority of smaller travel websites lack the bandwidth to take calls or emails from individual hotels so it’s almost a non-starter but even assuming they could - it could take weeks or months of back and forth before ever forging a partnership and drafting a contract. These smaller travel websites and apps typically don’t have the capability to build up their own hotel supply so it’s unlikely that a partnership like this could even be created in the first place even if the entire prospecting, negotiation and execution phase went perfectly. In short, it’s nearly impossible for hotels today to strike up direct relationships with smaller more niche distribution partners. Even when they can, it can take weeks or months for a hotel to strike up a new distribution partnership with a niche travel provider. In order to recreate the level of demand generated by Booking or Expedia, a hotel would need to successfully repeat this process hundreds or even thousands of times which is obviously not a commercially viable strategy. This dynamic has put hotels in a position where they cannot be agile and test new distribution channels which has consequently inflated third party commissions on OTAs and created massive rate parity issues due to a multitude of online resellers. With Impala, this whole prospecting, negotiation and execution process is streamlined meaning that a hotel can add new distribution partners like TripFactory and National Parks Express with minimal work and no upfront cost. Travel platforms like TripFactory create proposals with parameters such as commission structure, date availability and discounted rate.  With Impala, hotels can offer unique experiences like room upgrades or welcome cocktails instead of or in addition to discounts. They can select specific hotels within the Impala platform.   Hotels then get notified of new offers from relevant distribution partners in real-time. When they see interesting proposals from distribution platforms, they can then either accept them or propose new terms in just a few clicks. No contracts or even email conversations required.   Agile Leaders Will Thrive in the Next Generation of Travel The growth of global travel over the last century has been staggering. In 1950, 25 million tourists travelled the globe and by 2018 that number exploded to 1.8B. It’s easy to see why the hospitality industry thrived during this period. During this time period cars and planes became mass market products for the developed world making travel more accessible to all. Then, computer technologies like GDS and OTAs unlocked global demand for hotels by making it incredibly easy to find and book rooms. While the industry will continue to see strong growth over the coming century - it’s undeniable that the now enormous travel market has catalyzed increased competition. More competition means that hoteliers of the future will need to be more creative than those of the past in order to run profitable businesses. For hoteliers, sticking to the status quo simply won’t cut it. The hospitality teams that thrive in the future will be those that continually evolve and pivot to outcompete not only the hotel down the street, but also vacation rentals and any other disruptor, by strengthening their position within the distribution power curve. We can also expect that global travel behavior will continue to evolve and shift rapidly. What happens to hotels that are heavily dependent on international travel when it’s shut down? How do hotels react when autonomous cars enable guests to drive further distances to visit their properties? What strategies will be deployed to attract a new generation of remote workers?  Demand as a whole is growing but the nature of that demand is changing so quickly that hoteliers will need to be extremely agile in order to benefit from that growth. Impala’s vision is to disrupt legacy systems with a paradigm-shifting concept that removes the need for legacy infrastructure altogether and hotels globally are signing up to take part in the next generation of travel. Want to try Impala for free? List your hotel   This content was created collaboratively by Impala and Hotel Tech Report.