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10 Best Distribution Channels

Suiteness

Ranked 1st in Distribution Channels Top Alternative: Airbnb (0.0 /10)
Suiteness is a hotel tech company with the first suite-only booking platform offering users more...
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This vendor has active customers in fewer than 3 countries, check the map on their profile to make sure they service your region.
Most Popular
This vendor is the most popular in the category with 12 reviews across 1 countries.
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Hotel Tech Score is a composite ranking comprising of key signals such as: user satisfaction, review quantity, review recency, and vendor submitted information to help buyers better understand their products.
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COMPANY DESCRIPTION

Suiteness is a hospitality tech company that offers an online booking platform with an inventory of exclusive suites from leading hotel brands... read more

  • Based in
    Oakland, California
  • Founded in
  • 26 employees on Linkedin

Hopper

Ranked 2nd in Distribution Channels Top Alternative: Suiteness (8.4 /10)
Hopper is the award-winning mobile app that doesn't just let you book flights from your phone: It...

COMPANY DESCRIPTION

Hopper is the smart way to book travel on your phone. Combining massive amounts of data and advanced machine learning algorithms, Hopper predicts... read more

  • Based in
    Montréal (Canada)
  • Founded in
  • 187 employees on Linkedin

Expedia.com

Ranked 3rd in Distribution Channels Top Alternative: Suiteness (8.4 /10)
Travel company that owns and operates several international global online travel brands, primaril...

COMPANY DESCRIPTION

Expedia Group (NASDAQ: EXPE) is one of world's largest travel platforms. We help knock down the barriers to travel, making it easier, more... read more

  • Based in
    Seattle (United States)
  • Founded in
  • 33383 employees on Linkedin
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Booking.com

Ranked 4th in Distribution Channels Top Alternative: Suiteness (8.4 /10)
Travel fare aggregator website and travel metasearch engine for lodging reservations.

COMPANY DESCRIPTION

Booking.com is one of the world’s largest e-commerce companies, and the number one destination to book any type of accommodation. Our... read more

  • Based in
    Amsterdam (Netherlands)
  • Founded in
  • 12886 employees on Linkedin

Airbnb

Ranked 6th in Distribution Channels Top Alternative: Suiteness (8.4 /10)
Alternative lodging distribution platform.

COMPANY DESCRIPTION

Founded in August of 2008 and based in San Francisco, California, Airbnb is a trusted community marketplace for people to list, discover, and... read more

  • Based in
    San Francisco (United States)
  • Founded in
  • 7966 employees on Linkedin

Conichi

Ranked 8th in Distribution Channels Top Alternative: Suiteness (8.4 /10)
Hospitality, Beacons, Real time guest recognition, Customer experience, Mobile payment, Personali...

COMPANY DESCRIPTION

conichi - The Hotel App conichi revolutionizes the interaction between hoteliers and their guests. Through the conichi app guests are... read more

  • Founded in
  • 48 employees on Linkedin
Boutique Hotels, Travel, Luxury Hotels, Self-catering villas and apartments, Luxury Family Holida...

COMPANY DESCRIPTION

Mr & Mrs Smith is an award-winning hotel website and booking service specialising in finding the world's most inspiring boutique hotels... read more

  • Based in
    Santa Monica (United States)
  • Founded in
  • 170 employees on Linkedin

Peerspace

Ranked 10th in Distribution Channels Top Alternative: Suiteness (8.4 /10)
Temporary productive spaces, Collaborative economy, Coworking spaces, Event Venues, Offsite, Prod...

COMPANY DESCRIPTION

Peerspace is an online marketplace for unique and undiscovered locations. Our mission is to help companies and individuals find one-of-a-kind... read more

  • Based in
    San Francisco, California
  • Founded in
  • 47 employees on Linkedin

Recent Distribution Channels Articles

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Meituan partners with SiteMinder to explore the overseas hotel market

by
Maria Cricchiola

Meituan, China's leading e-commerce platform for services, has appointed SiteMinder, the global hotel industry’s leading guest acquisition platform, as its online distribution partner. The appointment marks Meituan’s first partnership with a hotel distribution technology provider as the company looks to expand its hotel inventory beyond its home market of China.  On 1 May 2019, Meituan set an industry record by processing over 2.8 million domestic hotel room nights in one day. By strategically partnering with SiteMinder, the e-commerce giant now has a complete hotel technology stack to attract international hotel markets, beginning with South-East Asia. For SiteMinder’s 35,000 hotel customers, the partnership with Meituan provides greater access than ever before to market their rooms to the lucrative Chinese traveler market. “As an uprising international hotel reservation platform in China, Meituan will bring new energy to the market with its huge young generation customer base. SiteMinder’s global presence, combined with its appeal to both large hotel chains and independent hotels, made it the perfect partner for us as we grow our international hotel supply and build on our multi-level technology service platform,” says Mr Zhong Qiang, General Manager of Meituan’s Overseas Accommodation Department.  “SiteMinder is pleased to partner with one of the most respected household names to come out of the Chinese market, and to support them in their growth journey. This partnership represents a great opportunity for hotels globally to further broaden both their distribution options and feeder markets via SiteMinder’s platform and, in particular, further benefit from the ever-growing outbound Chinese travel market,” says Mr James Bishop, Senior Director of Global Demand Partnerships at SiteMinder. Compass Hospitality, which operates hotels, serviced apartments and resorts across Thailand, Malaysia and the UK, is among the first beneficiaries of the Meituan-SiteMinder partnership. Says the group’s corporate general manager of digital marketing, Mr Rabin Gupta, “I am delighted that SiteMinder and Meituan have struck this new partnership. It is a great opportunity for us at Compass Hospitality to enhance our engagement with the Chinese market.” Meituan’s technology service platform today has more than 410 million transacting users. The company is publicly-listed in Hong Kong and holds a recent market value of approximately US$52 billion.   About Meituan As China's leading e-commerce platform for services, Meituan operates well-known mobile apps in China, including Meituan, Dianping, Meituan Waimai, Mobike and others. Meituan offers over 200 service categories including catering, on-demand delivery, car-hailing, bike-sharing, hotel and travel booking, movie ticketing, and other entertainment and lifestyle services, and covers 2800 cities and counties across China. The total transaction amount of Meituan reached RMB 515.6 billion in 2018, with an increase of 44.3% over the same period of last year. The total annual numbers of transaction users and active online merchants of Meituan reached 400 million and 5.8 million in 2018, respectively. Meituan Dianping (stock code: 3690.HK) was officially listed on the Main Board of The Stock Exchange of Hong Kong Limited (HKEX) on September 20, 2018. For more information, visit www.meituan.com.

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How to combat the soaring rate and cost of Cancellations

by
Claire Sawier

We Asked Hoteliers How They Combat Cancellations - Here’s What They Said The phenomenon of the just in case booker, the “maybe” booker who books multiple hotels to make their final decision on one (or none) of them later is covered in Part 1 of our cancellations. Providing the option to cancel a room later for free can often convince people to book with you, though they clearly do so with less commitment. But this growing practice has sent cancellation rates through the roof, particularly from OTAs (>40%) who initiated and aggressively encourage the practice. Hotels have followed OTAs to focus more on “free cancellations” for direct bookings, but the net result is a lot of wasted valuable time and resources spent on trying to convert “maybe bookers” who go on to cancel as they had no real intention to stay. Hotels need to focus their efforts on “converting to stay” and forget about wasting time on converting those who have no real intention to stay and will most likely go on to cancel. Hotel inventory is perishable, and bookings made in advance that cancel close to arrival make it much harder for revenue managers to yield revenue. Convert to stay, don’t convert to cancel Converting “free cancellation” bookers far up the funnel, the just in case bookers who are still shopping around, is more like opening up an “I’m interested” list. It should not be viewed in the same way as a booking from someone who has made a firm commitment to stay. Don’t fool yourself with good conversion rates if a good chunk goes on to be cancelled. Focus your efforts on offering decent direct booking benefits and incentivise early bookers to commit by paying in advance or at least paying a non-refundable deposit. In this regard, hotels can learn a lot from the airlines. Rather than a free cancellation policy that ties up inventory for a long period, some airlines allow you to cancel a flight within 24 hours of booking it provided it’s made 7 days before take-off! It’s the same free cancellation concept but their inventory is not locked down for weeks or in some cases months as it is with hotels. If you are going to lose a booking, lose it early! Learning from the Airlines Aer Lingus for example allows you to lock-in a price for 24 hours. This is designed to allow those who are not quite sure of their plans to hold a booking for 24 hours for a small fee. Bookings must be confirmed with a full payment before the expiry time/date specified, otherwise the booking is cancelled, and the fee is forfeited. British Airways also offers the option to hold a flight price for 72 hours for a small deposit. Why do hotels offer early bookers a free cancellation period up to 24 hours before arrival? That’s potentially months and months of that room being tied up only to be cancelled last minute. Using another approach, American Airlines sell fare add-ons that let you change your flight for free at any time, you pay extra for that flexibility. And some other airlines, like Southwest, let you change and cancel fares almost whenever you like, but instead of a refund, you get credit toward a future flight within a year of the original reservation. All Ryanair flights are changeable, but they cannot be cancelled so all “just in case” bookings become “use it or lose it” bookings. Lots of great ideas there to consider from the industry that masterminded yield management!Chains like Marriott, the largest hotel brand in the world, and Hilton are well known for their direct booking programs - It Pays to book Direct (Marriott) and Stop clicking around (Hilton). They combine a very strong direct booking strategy with a smart cancellation policy Direct champions Marriott and Hilton lead the way In 2017 Marriott famously revised its free cancellation policy from 24 hours before check-in time to 48 or 72 hours before check-in if cancellation fees were to be avoided. Other hotel chains such as Hilton soon followed suit. “We regularly review guest booking and cancellation patterns across our 5,000+ properties and have seen cancellation rates rise over the last few years,” Hilton spokesman Nigel Glennie said in a statement. “These insights have led to the proposed update, which will allow us to maximize the number of available rooms for guests seeking accommodation.” The changes that Marriott and Hilton made reflect an industry shift in the way hotels are approaching cancellations. It makes good business sense and removes a lot of volatility and headache around occupancy and forecasting.Bookassist surveyed hundreds of hotels across our network in April and the general feedback (unsurprisingly) was that OTA cancellation rates are significantly higher than direct cancellation rates. This supports general industry findings that report an increase in cancellations across the board, especially via OTAs. Direct Cancellation rates below 15% for over half of respondents to Bookassist’s survey Just over 42% of all respondents to the Bookassist survey reported OTA cancellation rates of between 30% and 50%, while more than half said their direct cancellation rates were below 15%. At Bookassist we see a huge variation across hotels largely due to the strategy they employ. What’s really obvious is that hotels that fail to adopt a strong direct booking policy suffer higher rates of direct cancellations, some of which can exceed 30%. Interestingly 26% of all hotels surveyed said that their cancellation rates on OTAs had decreased in the last year, with 28% saying that direct cancellations rates had decreased. On closer inspection we see that respondents with a reduction in both OTA and direct cancellations are hotels that have implemented a strong direct booking strategy that is reflected in their rate and cancellation policies. It’s great news for these hotels who are actively implementing successful strategies to reduce cancellations. When it comes to trying to understand why people cancel, over 50% of hotels reported they are not tracking the reason and a further 10% responded that they just “don’t know”. Just 37% of hotels surveyed said they are tracking why people cancel. But if you don’t know the reasons, you can’t address the issue and assumptions can be misleading. We also asked hoteliers what they are doing to address the issue of rising cancellations and here are just a few of their nuggets!   We asked hoteliers for ideas and got lots! “The best option is always to present the best rate and best conditions in the direct channel all the time” (Spain) “Take a 50% non-refundable deposit” (Gambia) “Engage with the guest once booked” (Mexico) “Present last minute and discount deals as non-refundable only” (Czech Republic) “Raise cancellation policy on OTAs to 3 days” (Italy) “Use non-refundable rates on OTAs only for certain dates - close off standard offers” (Czech Republic) “Offer a free change of date but not a cancellation” (Czech Republic) “Make non-refundable conditions more attractive” (Austria) “It’s very important not to lower rates on dates more than a few months into the future, to avoid cancellations and rebookings” (Spain) “Propose non-refundable benefits.” (France) “Credit cards are all tested, and reservations canceled in case of wrong cards” (France) “Bookings of 5 nights and more are automatically non-refundable” (France) “Pre-authorize the cards a week in advance in order to resell the rooms. Boost non-refundable bookings.” (France)   “We try to avoid lowering rates as much as possible, starting always with lower rates to begin with. If the market forces us towards lower rates, we try to do it only very last minute and outside the free cancellation window” (Spain) “We now have a non-refundable night in Booking.com for high demand months and kept our own website more flexible to incentivise direct bookings.” (Spain) “Set stricter rate policies for bookings that have longer lead-in times” (Spain) “Make the customer commit in advance by paying a deposit” (Spain) “We fill out a no-show report every day. This allows us to over book where we know we might get rooms back. We also do weekly calls for arrivals especially on the weekends, this cuts out a lot of cancellations at the last minute.” (Ireland) “The client has the option to transfer the reservation to another date within one year of arrival.” (Czech Republic) “We offer unique benefits and room types only available through the official website.” (Spain) “Remove the cancelation option for short lead in times e.g. 48hrs before arrival.” (Ireland) And one response that doesn’t exactly surprise…“We would like to remain anonymous as this can negatively affect our relationship with Booking.com” (Spain) Our own pointers Adopting a strong Direct Booking Strategy. Working with a direct booking partner who can help you to focus on your strategy. Engaging with metasearch - these are higher-intent bookers. Ensuring you offer direct bookers a strong mobile experience to avoid pushing would-be direct bookers onto OTAs. Building a deeper connection with your customers to be more resilient to cancellations. And most importantly, give people reasons to book direct, not just reasons to book… In our previous article on cancellations we stated that there are basically three reasons why people cancel. One of these is because they found a better deal for your hotel elsewhere. For a hotel to allow this to happen is totally unacceptable and it is totally avoidable. The only place a customer should ever be able to get the best deal should be hotel direct. Knock this one on the head by offering direct booking benefits that bookers actually value, and by making sure you actually tell them! Stop giving useless Direct Booking benefits Free wifi, complimentary parking and no booking fees are not direct booking benefits if you can also get them via an OTA. They’re just hotel benefits! If you want to encourage bookers away from OTAs then you need to offer “real” value that is not for OTA bookers, such as those in the example. Your website needs to highlight what’s in it for them if they book on your website, not just what’s in it for them if they book anywhere. Take a look at some winning examples that have proven direct booking uplift in figure 1. Figure 1: Three examples of using your website to clearly state the direct booking advantage, instead of just offering the same content as your OTA already does. These examples are all proven examples to capture more direct bookers.   Cancellations rates are rising and are a thorn in every hotelier’s side. They cost heavily and often mask and artificially boost hotel conversion rates. To effectively address cancellations, hotels need to:

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A 1,000 word micro-history of hotel distribution

by
Simone Puorto

To get a grasp on the current hotel distribution landscape and how much intelligence and work is needed to optimize each channel, it’s worth taking a moment to review its early history. Distribution mix was once a simple concept: walk-ins, phone calls, and the occasional (physical) mail were, fundamentally, the sole sources of hotel bookings. But things started changing when electronic reservation systems made their first appearance in the '60s and, eventually, became mainstream in the ’80s. By the end of the 20th century, hotel distribution shifted (literally almost overnight) online, and started to resemble what it is today. Over the last two decades, consolidation and new players entering the market have been crucial to an extraordinary growth in digital hotel distribution. Flash-forward to today, the current landscape is touted as merely a duopoly held by Booking and Expedia, and that is a quite accurate statement, at least to a certain extent and for the moment being. Even though it seems like distribution is ever-moving, in fact, there are clear patterns and trends. According to Phocuswright, for example, 2016 was “the first year when OTA lodging bookings in the U.S. exceeded total hotel website gross bookings”, and forecasts expect OTAs to reach over 40% market share by next year. This means that despite above-the-line marketing, targeted discounts and revamped loyalty programmes, consumers are not shifting to direct as their primary booking option as intensely as the big chains wanted. With this in mind, perhaps hotels should start reconsidering their relationships with online travel agencies and focus on the channels bringing the highest profit and volume. In an age where OTAs and wholesalers flex their rates across metasearch engines or marketplaces it is very unlikely that users will just “stop clicking around”. You just need to accept it and move on. There are, however, alternative distribution channels that could be leveraged with success or, at least, kept under one's radar. So let's dig into these distribution Goliaths.   Booking.com Born from the merging of booking.nl, bookings.org and Active Hotels (a.k.a. ctivebooking.com), over the years Booking.com became the biggest e-commerce website for travel, with around 200 offices worldwide and over 17,000 employees. Two years after Expedia turned the opportunity to buy booking.nl down in 2003 (ouch!), the Dutch startup was eventually acquired by Booking Holdings (at the time still operating under the Priceline Group moniker), which rebranded to Booking.com in 2006. The first version of the booking.nl website went live in '97, with an inventory of ten hotels and a commission rate of 1/4 of what it is today. According to its founder, Geert-Jan Bruinsma, he had the original idea during a dinner with friends, "got inspired" from the Hilton official website source code the and launched it with barely 50,000 €. During the years, Booking Holdings continued to grow thanks to an almost-mistakeless acquisition strategy: from Asian-based OTA Agoda to rental car service TravelJigsaw (a.k.a. Rentalcars.com), from travel metasearch engines Kayak, Momondo, CheapFlights, Mundi and HotelsCombined to restaurant-reservation service company OpenTable, not to mention yield management solution PriceMatch (now integrated in BookingSuite), RocketMiles, ASDigital, Buuteeq, Hotel Ninjas and the heavy investments made over the years in Chinese OTA Ctrip. Expedia Founded in 1996 as a division of Microsoft, Expedia was acquired by IAC/InterActiveCorp in 2003, which eventually spun it off in 2005. In 2012, Expedia took a majority stake in trivago (which the American OTA still owns after the metasearch went public). Under the IAC/InterActiveCorp brand first, and the Expedia's brand then, dozens of companies (eventually acquired or merged) operated and continue to operate: TripAdvisor (spun off in 2011), Hotels.com, HomeAway (merging VRBO, bedandbreakfast.com, vacationrentals.com, Abritel and FeWo), Egencia, Travelocity, Orbitz, HotWire, Wotif, lastminute.com.au, Ebookers, CheapTickets, AirAsiaGo, Venere.com (eventually merged into the mother brand), Classic Custom Vacations and many others. Today's market value of the company is almost $20 Billion, with over 22,000 employees around the World. Agoda Founded in 2005 by Michael Kenny and Robert Rosenstein, merging planetholiday.com and precisionreservations.com, Agoda can be viewed as a precursor in the industry. PlanetHoliday, in fact, was founded in 1997, just one year after Booking.nl and Expedia. Agoda focus is mainly on the Asia-Pacific region and it has a portfolio of over 1,000,000 vacation rentals and hotels worldwide. In 2007, the Bangkok/Singapore-based company has been acquired (for an undisclosed amount), by Booking Holdings, even though it continues operating independently. HRS With almost half a century of history, HRS Group is the (grand)father of all OTAs. Founded in 1972 by hotel clerk Robert Ragge, in 1995 it became the first website to provide an online hotel database. In his book, Outliers, Gladwell popularized what became known as the 10,000-hour rule, by documenting the lives of successful people. “Ten thousand hours is the magic number of greatness”, he wrote, inspired by the work of Daniel Levitin, the neurologist who scientifically proved that “10,000 hours of practice are required to achieve the level of mastery associated with being a world-class expert in anything”. The theory is fascinating, though, not always reliable, and HRS is the perfect example of this fallacy: even with almost half a century (or 400,000 hours) of experience under its belt, today it has a significantly less prominent market share than it used to have, while OTAs born decades later have outgrown it. In 2008 Ragge's son, Tobias, succeeded his father and acquired Tiscover, hotel.de, HolidayInsider and bought stakes in meetago and Lido Group. HRS currently lists 850,000 properties, operating mainly in German-speaking Countries. Wholesalers and Bedbanks Wholesalers and bed banks both made an extraordinary (yet unexpected) comeback over the last few years, mainly fueled by nebulous B2B2C rate strategies and smart acquisitions. With its database of over 70,000 beds and around 5,000 employees, the World’s largest bedbank is, of course, HotelBeds. Founded in 2001, HotelBeds became independent in 2016 (it was, up until that moment, owned by TUI), thanks to the backup of private equity funds Cinven and CPPIB. HotelBeds recently played the divide et impera card, by acquiring two of its main competitors: Tourico and GTA. AirBnB, Google and Amazon So, while even the small hotel entrepreneur is familiar with the aforementioned players, there are at least three companies trying to undermine this status quo. Airbnb, for example, recently officially stated that it offers more listings than Booking.com, while Google entered aggressively into the travel space, thanks to the European introduction of its facilitated booking system Book-on-Google and with its redesigned destination hotels page (https://www.google.com/travel/hotels/). Amazon, after trying (and failing) to get into the industry back in 2016, is rumored to be slowly (but steadily) trying to gain a more prominent slot in the market. Conclusions Far from being fully exploited or stagnated, the hotel distribution space still has a lot of potential, both in growth and diversification. With, on one side, main OTAs turning into metasearch engines-slash-marketplaces-slash-B2B providers hybrids and, on the other, search engines and retailers playing the OTA’s game, our industry has never been so interesting.

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Why did the European Commission go after airline GDS and not hotels?

by
Hotel Tech Report

After the European Commission successfully prosecuted Google for its unfair search practices, travel industry pundits wondered if Google’s suite of travel products would be scrutinized next. While that hasn’t happened (yet), the commission turned its attention to another contentious topic in travel: the contracts between airlines and global distribution providers Sabre and Amadeus. Notably overlooked was the third biggest GDS, Travelport. In a press release, the commission announced an antitrust “investigation into airline ticket distribution services” which would: “investigate whether certain terms in Amadeus’ and Sabre’s agreements with airlines and travel agents may restrict the ability of airlines and travel agents to use alternative suppliers of ticket distribution services.”   The EC is investigating whether these contracts “may breach European Union competition rules which prohibit agreements between companies that prevent, restrict or distort competition within the European Union’s Single Market.”   Why airlines and not hotels? For hotels that feel squeezed by intermediaries, it may seem disheartening that the investigation doesn’t extend into other aspects of the GDS business. With hotels paying far more commissions than airlines for each booking, there’s certainly more money exchanging hands. In fact, airline distribution costs have generally fallen while hotel distribution costs remain high. In the EU, there’s a large amount of fragmentation in hospitality, which means that the average hotel has far less power at the negotiating table when it comes to the GDS. So why did the EC choose to open an antitrust investigation into airline contracts and not those with hotels? Here’s why.   Reason #1: Lufthansa’s bold move It wouldn't be a travel industry story without a little drama. This issue started back to 2015 when Lufthansa made a bold move to encourage more direct bookings: a surcharge for any bookings made via GDS. Amidst protests from GDS and agencies, the airline refused to back down. This led to a formal complaint from the European Technology and Travel Services Association (ETTSA), which languished with the EC. In July 2018, ETTSA called out the regulators for taking 30 months to respond to its initial complaint, saying that the European Commission is “tacitly giving the thumbs-up to Lufthansa’s unfair conduct, which consists of weakening the effectiveness of neutral distribution channels used by consumers to compare prices of different airlines.” Five months later, the EC announced its investigation into airline contracts with Sabre and Amadeus. While not explicitly mentioning Lufthansa, or the ETTSA’s claim of anti-competitive behavior, the commission committed to the investigation. There's been no comparable move on the hotel side of the GDS business, so there’s been no comparable investigation. If Marriott, Hilton, Accor or Intercontinental step up here it will certainly increase the odds of a shake-up in hotel GDS as well.   Reason #2: The dominance The second reason why regulators are looking at airlines versus hotels is due to the dominance of airline bookings as a share of total revenue. A look at each company’s third-quarter results shows just how dominant Sabre and Amadeus are when it comes to air bookings: Amadeus accounts for 43.4% of agency air bookings and Sabre takes 38.6%.   Sabre Q3 2018 results   The disclosure of these market share figures signal how important air is for both companies; there’s no comparative metric for lodging. At Sabre, lodging made up 11.8% of total Travel Network bookings in Q3 2018; during the same quarter at Amadeus, non-air bookings accounted for 10.7% of its GDS business.   Amadeus Q3 2018 results   Dominance matters because most business trips require airfare. Since it’s much rarer for a business trip to be hotel-only within the agencies that rely on the GDS for inventory (business trips are generally booked through GDS vs. OTA), the channels with the most comprehensive access to airline inventory will win more agency business. This dominance is also the primary reason why Lufthansa added its GDS surcharge. The airline needed to do something to pull bookings away from those channels, and a surcharge made more sense than an expensive “book direct” campaign that wouldn’t change the behavior of agencies using the GDS. In this case, even with potential legal action and agency pushback,  Lufthansa calculated that a stick works better than a carrot.   Reason #3: The lack of choice With airlines, there are fewer options for both airline and seat type. With hotels, there’s more diversity of brand, service, style, and cost. There are also far more attributes of a given hotel room than a given airline seat, which diversifies the selection for guests. The rise of mobile devices and dynamic pricing technologies shifted hotel buying behavior. Apps like HotelTonight impacted advance purchasing behavior, and services like TripBam took advantage of flexible cancellation policies. Metasearch also simplified hotel search, making it easier to compare hotels with similar attributes for both consumers and agencies. In essence, hotels and travelers are less reliant on one channel or technology for hotel bookings. Meanwhile, airlines never really had that sort of innovation, which may be why the EC decided to investigate the “full content” clauses in GDS contracts -- clauses that are not common in GDS contracts with accommodations providers.   Reason #4: The connectivity There's also been an underlying tension around the “New Distribution Capability,” or NDC. The framework, an initiative of IATA, brings more choice to the buying experience. Up to this point, ancillaries and bundled fares have not been easy to purchase via third-party channels. There’s been no industry standard that defines how airfare is distributed and displayed to agency clients via third-party channels. Travel agencies relied on a patchwork of connectivity that made it nearly impossible to book the new classes of airfare popularized by airlines, such as Basic Economy or bundles that include checked bags. This meant that consumers could have a better experience booking airfare on an airline’s website than going through an agency or metasearch channel. This disparity in consumer experience may have contributed to the EC’s investigation. Rightly so, agencies were displeased. Their business is to book travel for clients, and this patchwork made this incredibly challenging. NDC promises to streamline connectivity between agencies and airlines, which is why the GDS were generally resistant. This resistance often played out in their contracts with airlines, which limited connectivity. The GDS didn’t want to get pushed out of their cash cow business as intermediaries, and the contracts were the leverage that kept innovation at bay. Without the GDS demand, many airlines could never survive. So most airlines begrudgingly accepted the “full content” clauses that limited airlines’ abilities to revenue manage by channel. Hotels, in contrast, have maintained healthy channel control. There are more ways for hotels to limit inventory to specific channels and prices, making the marketplace more price competitive with plenty of options for consumers. No one player has as much power in lodging as the GDS do in airlines.   Reason #5: The technology Finally, how hotels connect their supply to sources of demand differs from airlines. While most airlines connect directly to the GDS, not every hotel does. For smaller to mid-size hotels, there’s at least one other layer of technology between the hotel and third-party distribution channels: the property management system, channel manager, and/or revenue management system. These tools handle connectivity, so hotels are not necessarily direct contracting with, or connecting to, the GDS. This makes contractual limitations much less impactful for hotels than airlines. Of course, hotels still have commission contracts. It’s just that hotels have more control and choice over where to distribute inventory. Hotels have more leverage thanks to less concentrated demand.   There’s also more flexibility. Many property management systems also include direct booking tools, so that inventory is managed quite seamlessly across a hotel’s website and third-party distribution. Hotels, therefore, have more granular controls to manage which rooms are offered on which channels at what price.     Looking ahead: consolidation continues None of this is saying that the relationship between hotels and the GDS is above reproach or immune to regulation. Amadeus’ recent acquisition of TravelClick for $1.5 billion recentered the hospitality technology space; Sabre’s $360 million purchase of Farelogix had a similar effect on the airline technology space. The continued expansion of the hotel and airline technology units of Sabre, Amadeus, and Travelport (recently acquired by Elliott Management) means that more consolidation is inevitable. By consolidating a larger share of technology spend, both companies risk more scrutiny on all aspects of their business -- including hotels. Since the GDS (and, by extension, agencies and OTAs) command more distribution power in hotels than airlines, hotel GDS has experienced less scrutiny from regulators. Ironically, higher fees have kept hotel GDS out of regulatory limelight. Therein lies the billion dollar question: does the scale and reach of the main GDS players reduce competition and stifle innovation?

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The 3 big mistakes that revenue managers make

by
Hollie McHugh

The hospitality industry has become a very dynamic one in recent years. Revenue Management strategies that would have once been deemed acceptable and rational, are no longer efficient. Be a next-level Revenue Manager and avoid the three big mistakes that are commonly made with making pricing decisions.   1. Putting Quantity Over Quality Firstly, despite what many Revenue Managers think, occupancy is not the deciding factor of how profitable a hotel is and should not be their main priority. Higher occupancy will actually result in lower profits if, in order to achieve it, the ADR is dropped to a rate that is not compensated. Take this simple example- A hotel with 100 rooms sells 90 of them, at a 100 euro rate. This results in 9000 euro in revenue. The Revenue Manager then decides to set a 100% occupancy goal, selling 100 rooms at an 85 euro rate. This results in only 8500 euro in revenue. You must find the right balance between occupancy and ADR in order to achieve your highest potential profits. Furthermore, even if an ADR reduction is compensated by an increased number of bookings, don’t forget about the extra operational expenses that come with renting more rooms! So when you’re faced with a thin option between higher occupancy or higher ADR, bear this in mind before making your choice. It’s usually better to focus on ADR in properties with no extra revenue-generating departments, like restaurants, bars and spas.   2. Making Price Adjustments Based on Occupancy Making pricing decisions based on occupancy alone is a big mistake and can lead to revenue losses. An important factor to consider is the number of remaining days before arrival. For example, 70% occupancy tomorrow is very different to 70% occupancy 90 days from now. In the first case, you should lower your price to sell those remaining rooms. The second case indicates high pick up outside of the standard booking window, which should lead to increasing the room rate in order to benefit from the high demand. Another price adjustment trigger is the booking pace, which gives a better insight into room demand. Say, for example, the occupancy for the upcoming weekend is at 70% and each day for the last 7 days has seen a significant percentage of bookings for that weekend. This demonstrates a high demand, which allows for a price increase since the pickup indicates early sell out at the current price. In another situation, no reservations have been booked for the weekend during the last seven days, and the hotel received 3 cancellations yesterday, so the occupancy dropped from 73% to 70%. Although the occupancy and the number of remaining days are the same in both situations, this second scenario shows that demand is weak or the room rates are too high. Therefore, a smart Revenue Manager will make an opposite price adjustment, lowering the rates to stay competitive. This confirms that occupancy alone cannot provide enough information for effective Revenue Management decisions.   3. Pricing Based on Competition Another misconception that is still prevalent among many Revenue Managers is that they should base their prices on their competitors’ rates. Certainly, it’s important to always be aware of your competitors’ rates. However, that’s not to say that you should prioritise their prices over your hotel’s actual supply and demand. Different types of travelers are looking for different kinds of accommodations at different times. Even in the unlikely case that your competitor has identical features to your own hotel, your comp sets may not always be skilled in current Revenue Management strategies. How do you know they’re accurately following demand fluctuations and are instantly reacting to these fluctuations with optimal pricing? Your competitors might not be aware of the true demand in your area, let alone for your hotel. Therefore, by following their prices, you may sell out way too early or be left with many unsold rooms. Furthermore, your competitor may have just booked a large group reservation that resulted in an increase in price for transient business. With fewer rooms to fill, they can afford to increase their prices for those that are leftover. However, the true demand for your hotel hasn’t changed, so by following their pricing decision, you will be left with drastically diminished occupancy rates.   Conclusion So, now you know what not to do, what you should do is concentrate on increasing actual profits and focus on the real demand flow. Just by making this simple shift in thinking, you’ll be much more in line and clued in with where the hospitality industry is going these days. In turn, that will help your property be more successful!

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Meituan partners with SiteMinder to explore the overseas hotel market

SiteMinder

Meituan, China's leading e-commerce platform for services, has appointed SiteMinder, the global hotel industry’s leading guest acquisition platform, as its online distribution partner. The appointment marks Meituan’s first partnership with a hotel distribution technology provider as the company looks to expand its hotel inventory beyond its home market of China.  On 1 May 2019, Meituan set an industry record by processing over 2.8 million domestic hotel room nights in one day. By strategically partnering with SiteMinder, the e-commerce giant now has a complete hotel technology stack to attract international hotel markets, beginning with South-East Asia. For SiteMinder’s 35,000 hotel customers, the partnership with Meituan provides greater access than ever before to market their rooms to the lucrative Chinese traveler market. “As an uprising international hotel reservation platform in China, Meituan will bring new energy to the market with its huge young generation customer base. SiteMinder’s global presence, combined with its appeal to both large hotel chains and independent hotels, made it the perfect partner for us as we grow our international hotel supply and build on our multi-level technology service platform,” says Mr Zhong Qiang, General Manager of Meituan’s Overseas Accommodation Department.  “SiteMinder is pleased to partner with one of the most respected household names to come out of the Chinese market, and to support them in their growth journey. This partnership represents a great opportunity for hotels globally to further broaden both their distribution options and feeder markets via SiteMinder’s platform and, in particular, further benefit from the ever-growing outbound Chinese travel market,” says Mr James Bishop, Senior Director of Global Demand Partnerships at SiteMinder. Compass Hospitality, which operates hotels, serviced apartments and resorts across Thailand, Malaysia and the UK, is among the first beneficiaries of the Meituan-SiteMinder partnership. Says the group’s corporate general manager of digital marketing, Mr Rabin Gupta, “I am delighted that SiteMinder and Meituan have struck this new partnership. It is a great opportunity for us at Compass Hospitality to enhance our engagement with the Chinese market.” Meituan’s technology service platform today has more than 410 million transacting users. The company is publicly-listed in Hong Kong and holds a recent market value of approximately US$52 billion.   About Meituan As China's leading e-commerce platform for services, Meituan operates well-known mobile apps in China, including Meituan, Dianping, Meituan Waimai, Mobike and others. Meituan offers over 200 service categories including catering, on-demand delivery, car-hailing, bike-sharing, hotel and travel booking, movie ticketing, and other entertainment and lifestyle services, and covers 2800 cities and counties across China. The total transaction amount of Meituan reached RMB 515.6 billion in 2018, with an increase of 44.3% over the same period of last year. The total annual numbers of transaction users and active online merchants of Meituan reached 400 million and 5.8 million in 2018, respectively. Meituan Dianping (stock code: 3690.HK) was officially listed on the Main Board of The Stock Exchange of Hong Kong Limited (HKEX) on September 20, 2018. For more information, visit www.meituan.com.

How to combat the soaring rate and cost of Cancellations

Bookassist

We Asked Hoteliers How They Combat Cancellations - Here’s What They Said The phenomenon of the just in case booker, the “maybe” booker who books multiple hotels to make their final decision on one (or none) of them later is covered in Part 1 of our cancellations. Providing the option to cancel a room later for free can often convince people to book with you, though they clearly do so with less commitment. But this growing practice has sent cancellation rates through the roof, particularly from OTAs (>40%) who initiated and aggressively encourage the practice. Hotels have followed OTAs to focus more on “free cancellations” for direct bookings, but the net result is a lot of wasted valuable time and resources spent on trying to convert “maybe bookers” who go on to cancel as they had no real intention to stay. Hotels need to focus their efforts on “converting to stay” and forget about wasting time on converting those who have no real intention to stay and will most likely go on to cancel. Hotel inventory is perishable, and bookings made in advance that cancel close to arrival make it much harder for revenue managers to yield revenue. Convert to stay, don’t convert to cancel Converting “free cancellation” bookers far up the funnel, the just in case bookers who are still shopping around, is more like opening up an “I’m interested” list. It should not be viewed in the same way as a booking from someone who has made a firm commitment to stay. Don’t fool yourself with good conversion rates if a good chunk goes on to be cancelled. Focus your efforts on offering decent direct booking benefits and incentivise early bookers to commit by paying in advance or at least paying a non-refundable deposit. In this regard, hotels can learn a lot from the airlines. Rather than a free cancellation policy that ties up inventory for a long period, some airlines allow you to cancel a flight within 24 hours of booking it provided it’s made 7 days before take-off! It’s the same free cancellation concept but their inventory is not locked down for weeks or in some cases months as it is with hotels. If you are going to lose a booking, lose it early! Learning from the Airlines Aer Lingus for example allows you to lock-in a price for 24 hours. This is designed to allow those who are not quite sure of their plans to hold a booking for 24 hours for a small fee. Bookings must be confirmed with a full payment before the expiry time/date specified, otherwise the booking is cancelled, and the fee is forfeited. British Airways also offers the option to hold a flight price for 72 hours for a small deposit. Why do hotels offer early bookers a free cancellation period up to 24 hours before arrival? That’s potentially months and months of that room being tied up only to be cancelled last minute. Using another approach, American Airlines sell fare add-ons that let you change your flight for free at any time, you pay extra for that flexibility. And some other airlines, like Southwest, let you change and cancel fares almost whenever you like, but instead of a refund, you get credit toward a future flight within a year of the original reservation. All Ryanair flights are changeable, but they cannot be cancelled so all “just in case” bookings become “use it or lose it” bookings. Lots of great ideas there to consider from the industry that masterminded yield management!Chains like Marriott, the largest hotel brand in the world, and Hilton are well known for their direct booking programs - It Pays to book Direct (Marriott) and Stop clicking around (Hilton). They combine a very strong direct booking strategy with a smart cancellation policy Direct champions Marriott and Hilton lead the way In 2017 Marriott famously revised its free cancellation policy from 24 hours before check-in time to 48 or 72 hours before check-in if cancellation fees were to be avoided. Other hotel chains such as Hilton soon followed suit. “We regularly review guest booking and cancellation patterns across our 5,000+ properties and have seen cancellation rates rise over the last few years,” Hilton spokesman Nigel Glennie said in a statement. “These insights have led to the proposed update, which will allow us to maximize the number of available rooms for guests seeking accommodation.” The changes that Marriott and Hilton made reflect an industry shift in the way hotels are approaching cancellations. It makes good business sense and removes a lot of volatility and headache around occupancy and forecasting.Bookassist surveyed hundreds of hotels across our network in April and the general feedback (unsurprisingly) was that OTA cancellation rates are significantly higher than direct cancellation rates. This supports general industry findings that report an increase in cancellations across the board, especially via OTAs. Direct Cancellation rates below 15% for over half of respondents to Bookassist’s survey Just over 42% of all respondents to the Bookassist survey reported OTA cancellation rates of between 30% and 50%, while more than half said their direct cancellation rates were below 15%. At Bookassist we see a huge variation across hotels largely due to the strategy they employ. What’s really obvious is that hotels that fail to adopt a strong direct booking policy suffer higher rates of direct cancellations, some of which can exceed 30%. Interestingly 26% of all hotels surveyed said that their cancellation rates on OTAs had decreased in the last year, with 28% saying that direct cancellations rates had decreased. On closer inspection we see that respondents with a reduction in both OTA and direct cancellations are hotels that have implemented a strong direct booking strategy that is reflected in their rate and cancellation policies. It’s great news for these hotels who are actively implementing successful strategies to reduce cancellations. When it comes to trying to understand why people cancel, over 50% of hotels reported they are not tracking the reason and a further 10% responded that they just “don’t know”. Just 37% of hotels surveyed said they are tracking why people cancel. But if you don’t know the reasons, you can’t address the issue and assumptions can be misleading. We also asked hoteliers what they are doing to address the issue of rising cancellations and here are just a few of their nuggets!   We asked hoteliers for ideas and got lots! “The best option is always to present the best rate and best conditions in the direct channel all the time” (Spain) “Take a 50% non-refundable deposit” (Gambia) “Engage with the guest once booked” (Mexico) “Present last minute and discount deals as non-refundable only” (Czech Republic) “Raise cancellation policy on OTAs to 3 days” (Italy) “Use non-refundable rates on OTAs only for certain dates - close off standard offers” (Czech Republic) “Offer a free change of date but not a cancellation” (Czech Republic) “Make non-refundable conditions more attractive” (Austria) “It’s very important not to lower rates on dates more than a few months into the future, to avoid cancellations and rebookings” (Spain) “Propose non-refundable benefits.” (France) “Credit cards are all tested, and reservations canceled in case of wrong cards” (France) “Bookings of 5 nights and more are automatically non-refundable” (France) “Pre-authorize the cards a week in advance in order to resell the rooms. Boost non-refundable bookings.” (France)   “We try to avoid lowering rates as much as possible, starting always with lower rates to begin with. If the market forces us towards lower rates, we try to do it only very last minute and outside the free cancellation window” (Spain) “We now have a non-refundable night in Booking.com for high demand months and kept our own website more flexible to incentivise direct bookings.” (Spain) “Set stricter rate policies for bookings that have longer lead-in times” (Spain) “Make the customer commit in advance by paying a deposit” (Spain) “We fill out a no-show report every day. This allows us to over book where we know we might get rooms back. We also do weekly calls for arrivals especially on the weekends, this cuts out a lot of cancellations at the last minute.” (Ireland) “The client has the option to transfer the reservation to another date within one year of arrival.” (Czech Republic) “We offer unique benefits and room types only available through the official website.” (Spain) “Remove the cancelation option for short lead in times e.g. 48hrs before arrival.” (Ireland) And one response that doesn’t exactly surprise…“We would like to remain anonymous as this can negatively affect our relationship with Booking.com” (Spain) Our own pointers Adopting a strong Direct Booking Strategy. Working with a direct booking partner who can help you to focus on your strategy. Engaging with metasearch - these are higher-intent bookers. Ensuring you offer direct bookers a strong mobile experience to avoid pushing would-be direct bookers onto OTAs. Building a deeper connection with your customers to be more resilient to cancellations. And most importantly, give people reasons to book direct, not just reasons to book… In our previous article on cancellations we stated that there are basically three reasons why people cancel. One of these is because they found a better deal for your hotel elsewhere. For a hotel to allow this to happen is totally unacceptable and it is totally avoidable. The only place a customer should ever be able to get the best deal should be hotel direct. Knock this one on the head by offering direct booking benefits that bookers actually value, and by making sure you actually tell them! Stop giving useless Direct Booking benefits Free wifi, complimentary parking and no booking fees are not direct booking benefits if you can also get them via an OTA. They’re just hotel benefits! If you want to encourage bookers away from OTAs then you need to offer “real” value that is not for OTA bookers, such as those in the example. Your website needs to highlight what’s in it for them if they book on your website, not just what’s in it for them if they book anywhere. Take a look at some winning examples that have proven direct booking uplift in figure 1. Figure 1: Three examples of using your website to clearly state the direct booking advantage, instead of just offering the same content as your OTA already does. These examples are all proven examples to capture more direct bookers.   Cancellations rates are rising and are a thorn in every hotelier’s side. They cost heavily and often mask and artificially boost hotel conversion rates. To effectively address cancellations, hotels need to:

The 3 big mistakes that revenue managers make

Net Affinity

The hospitality industry has become a very dynamic one in recent years. Revenue Management strategies that would have once been deemed acceptable and rational, are no longer efficient. Be a next-level Revenue Manager and avoid the three big mistakes that are commonly made with making pricing decisions.   1. Putting Quantity Over Quality Firstly, despite what many Revenue Managers think, occupancy is not the deciding factor of how profitable a hotel is and should not be their main priority. Higher occupancy will actually result in lower profits if, in order to achieve it, the ADR is dropped to a rate that is not compensated. Take this simple example- A hotel with 100 rooms sells 90 of them, at a 100 euro rate. This results in 9000 euro in revenue. The Revenue Manager then decides to set a 100% occupancy goal, selling 100 rooms at an 85 euro rate. This results in only 8500 euro in revenue. You must find the right balance between occupancy and ADR in order to achieve your highest potential profits. Furthermore, even if an ADR reduction is compensated by an increased number of bookings, don’t forget about the extra operational expenses that come with renting more rooms! So when you’re faced with a thin option between higher occupancy or higher ADR, bear this in mind before making your choice. It’s usually better to focus on ADR in properties with no extra revenue-generating departments, like restaurants, bars and spas.   2. Making Price Adjustments Based on Occupancy Making pricing decisions based on occupancy alone is a big mistake and can lead to revenue losses. An important factor to consider is the number of remaining days before arrival. For example, 70% occupancy tomorrow is very different to 70% occupancy 90 days from now. In the first case, you should lower your price to sell those remaining rooms. The second case indicates high pick up outside of the standard booking window, which should lead to increasing the room rate in order to benefit from the high demand. Another price adjustment trigger is the booking pace, which gives a better insight into room demand. Say, for example, the occupancy for the upcoming weekend is at 70% and each day for the last 7 days has seen a significant percentage of bookings for that weekend. This demonstrates a high demand, which allows for a price increase since the pickup indicates early sell out at the current price. In another situation, no reservations have been booked for the weekend during the last seven days, and the hotel received 3 cancellations yesterday, so the occupancy dropped from 73% to 70%. Although the occupancy and the number of remaining days are the same in both situations, this second scenario shows that demand is weak or the room rates are too high. Therefore, a smart Revenue Manager will make an opposite price adjustment, lowering the rates to stay competitive. This confirms that occupancy alone cannot provide enough information for effective Revenue Management decisions.   3. Pricing Based on Competition Another misconception that is still prevalent among many Revenue Managers is that they should base their prices on their competitors’ rates. Certainly, it’s important to always be aware of your competitors’ rates. However, that’s not to say that you should prioritise their prices over your hotel’s actual supply and demand. Different types of travelers are looking for different kinds of accommodations at different times. Even in the unlikely case that your competitor has identical features to your own hotel, your comp sets may not always be skilled in current Revenue Management strategies. How do you know they’re accurately following demand fluctuations and are instantly reacting to these fluctuations with optimal pricing? Your competitors might not be aware of the true demand in your area, let alone for your hotel. Therefore, by following their prices, you may sell out way too early or be left with many unsold rooms. Furthermore, your competitor may have just booked a large group reservation that resulted in an increase in price for transient business. With fewer rooms to fill, they can afford to increase their prices for those that are leftover. However, the true demand for your hotel hasn’t changed, so by following their pricing decision, you will be left with drastically diminished occupancy rates.   Conclusion So, now you know what not to do, what you should do is concentrate on increasing actual profits and focus on the real demand flow. Just by making this simple shift in thinking, you’ll be much more in line and clued in with where the hospitality industry is going these days. In turn, that will help your property be more successful!

Amadeus Accelerates Expansion in Hospitality Sector with $1.52bn Agreement to Acquire TravelClick

By Hotel Tech Report

Deal will significantly expand Amadeus’ presence in the hospitality sector. Addition of TravelClick’s cloud-based solutions for mid-chain and independent hotels will enable Amadeus to reach all segments of the market with an enhanced portfolio.Madrid, 10 August 2018 - Amadeus has agreed to acquire TravelClick from Thoma Bravo, a leading private equity investment firm, for USD $1.52bn.   TravelClick, which is headquartered in New York City, is a leading global hospitality provider that serves more than 25,000 customers across 176 countries. It provides innovative cloud-based solutions, including an independent and mid-size hotel Central Reservation System (CRS) and Guest Management Solution (GMS), as well as business intelligence and media solutions. This portfolio gives hotels distribution reach across all channels, both digital and traditional. It also allows them to improve digital interaction with guests, increase revenues and performance, reduce cost and create a strong brand. The addition of TravelClick’s solutions to the Amadeus portfolio will create a hospitality leader providing a broad range of innovative technology to hotels and chains of all sizes across the globe.  “TravelClick has a great team, great technology and a broad customer base, and we are looking forward to welcoming such a successful business into Amadeus,” said Luis Maroto, President and CEO of Amadeus. “Our ambition is to provide the hospitality industry with the tools they need to grow their businesses and deliver a great experience to their guests. The combination of our two portfolios will allow us to provide that to hotels of all shapes and sizes across the world.”“This deal marks the next stage in TravelClick’s incredible journey of success in delivering ground-breaking solutions for hoteliers,” said Larry Kutscher, CEO of TravelClick. “I couldn’t be more proud of our team or more excited about the impact our combined companies will have on the hospitality industry as we begin to deliver the next generation of innovation for hoteliers.”“This is a huge step forward for Amadeus in hospitality,” said Francisco Perez-Lozao, Senior Vice President, Strategic Growth Businesses at Amadeus. “While we have already made strong progress with the large chains, TravelClick gives us access to the mid-chain and independent hotel segment that makes up almost three-quarters of the market. We can now serve the entire industry with a very broad portfolio of solutions and we are looking for significant growth in the years ahead.” “TravelClick is an excellent example of Thoma Bravo’s proven investment approach of acquiring a best in class vertical market software company and working alongside talented leadership to implement operational best practices and drive growth both organically and through M&A,” said Holden Spaht, a managing partner at Thoma Bravo. “We appreciate the outstanding execution of Larry Kutscher and the management team at TravelClick, and believe the company is well positioned to continue delivering innovative software, data analytics and marketing services that maximize revenue for hotels around the world.”As part of the acquisition, approximately 1,100 TravelClick employees are expected to join Amadeus. Amadeus and Thoma Bravo expect to close the acquisition in the fourth quarter of the calendar year 2018, following regulatory approvals.  The transaction will be debt-financed and immediately earnings accretive.