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Mr. McCartan

Sales & Marketing

Sales Still Demands the Personal Touch

By Michael McCartan, Managing Director Europe, the Middle East, and Africa, Duetto

During the last decade selling has changed dramatically and this has been a result of the way social interaction has been altered with the advancement in communications technologies in the age of internet.

Our yearning for more information and quicker interactions, fueled by our thirst to reduce costs, has had a profuse impact on what we expect from suppliers and how we secure deals. The development in conferencing technologies to replace expensive travel programmes pushed the utilization of email and websites as a way to capture, store and access information. Business travel began to decline, hitting the core of a hotel's corporate business.

With the introduction of new technologies, more and more people started adopting them for personal consumption- first for the wealth of information that was being generated, second by the opportunity to access a broader choice of options, and third to purchase products at significantly cheaper prices from new businesses that had found a way to work smarter and faster more cheaply.

Everyday items had their prices slashed; businesses no longer had the expense of huge shop fronts or the need to be located near the highest footfall. As a result their outgoings significantly decreased, profit margins increased and their chance to access a wider global market became instantly apparent.

We stopped buying by phone, submitting orders by fax or arranging long-drawn out meetings to secure a deal. Instead Online Shopping Carts made purchases immediate and emails were used to thrash-out contracts. This removed all necessity to interact personally between supplier and buyer. Many businesses made customer service near impossible to access, you were lucky to have an email or comment page on the website in order to complain or negotiate.

Intermediaries Took Control

This has created a divide between the supplier and buyer, and allowed intermediaries to find their corner; whether it is online retail websites selling a wide range of merchandise or Online Travel Agents (OTAs) taking advantage of a new market whereby their own suppliers had little knowledge and education of ecommerce. As a result these clever business entrepreneurs acquired the ownership of key words for consumer goods and access to consumers globally that helped build their brand - taking away from the supplier.

Multiple online businesses as a result competed, offering both incredibly competitive prices against the traditional business and also doing their best to out-do their online business counterparts. The emergence of Expedia, PriceLine and Orbitz are all examples of how in the travel industry this war was won by travel agents. Small businesses that at an early stage started in a residential garage with no fixed costs and the opportunity to be flexible on rates went on to become big companies now having multi-million dollar turnovers.

Hotels Lost the Battle: Consumer Behaviour Changes

For the hotel industry it was always going to be a lost battle. Hotels needed premium locations, in the hearts of cities and towns for their guests. Expenses were fixed, and increasing, as rent, tax and utility bills in sought-after buildings increased.

Hotel contracts, dealt in person, with high street travel agents were in competition with discount travel websites who had immediate access to the savvy consumer who was price-shopping. The consumer attitude had changed, the vulnerable and weak traveler could no longer be persuaded to pay more, or be duped into a more expensive deal. The consumer can now select what they want, when they want and search for the best price they can. The age of persuasion and influence was being left behind, and therefore margins were being cut in half.

If the only way consumers could interact with their booking through these intermediaries was by email, the level of service had already fallen dramatically. The personal touch was being lost. As imposed booking restrictions became apparent (like pre-payment purchases, and limited cancellation policies) consumers lost loyalty to brands and commitments to hotels they had used on a frequent basis. Travelers saw there were more options for them and a chance to get better value-for-money, especially when the recession set in and purses were tightened from 2007.

Instant access to hotels also made it easier for consumers, but has had a significant impact on the performance of hotels. Properties were selling out rooms before they had chance to log all reservations in their Property Management System (PMS), they became over booked and were faced with the cost of booking guests at local partner hotels. The sales team had more data to deal with, from knowing who was selling their rooms on what website and at what price, to how their competitors were performing, while all the while seeing their bookings decrease from their long-term traditional travel agent sales partners.

Adapting to the New Sales Approach

Hotels had to adapt fast, and technology was key. Computer systems needed to be upgraded, secure and fast internet cables installed, staff trained across these systems while also ensuring that traditional PMS and CRS technologies were meeting this new demand. Hotels had to learn virtual communications; renowned for service and interpersonal skills with guests, a new way of dealing and communicating was coming into play and only the savvy hoteliers were able to adapt fast to this changing marketplace.

The emergence of the Revenue Manager in the hotel industry started to change the shape of hotel sales; they were learning how to strike deals and take back control of the consumer booking cycle. It's still an ongoing task for many hotels, and thousands of properties worldwide still lack the knowledge, understanding and capabilities of managing more sales partners targeting a wider consumer-base through a myriad of online travel and information web-portals.

As a result, knowledgeable Revenue managers are driving the advancement of sophisticated reservation capturing techniques that are forcing the closure of traditional travel agents. One of our sales managers talks of high street businesses littered across South Africa that are shutting shop plastering "Gone Fishing" on their doors. To use a simple analogy - hotels used third party sales partners (travel agents) to "fish" for bookings for them. Now, revenue managers have learned it is easier and better to go it alone.

These traditional shop-fronted travel agents made a grave mistake; they were fishing in the wrong pools. Consumers had moved to newer waters, and this then challenged the hotelier to find new ways to bring bookings. So hoteliers began fishing themselves. As a result the selling technique was changing, it is time for hotels to understand how travel shoppers think, how they behave and how to sell direct to secure the best guest, at the best price, from the right location. Now selling is much like the Airline model. The fuller the plane, the higher the price!

New Fishing Techniques by "Revenue Managers"

Revenue management is all about understanding and selling the right room, to the right person, at the right time, for the right price. Very much like the age-old rule in hotel operations, pertaining to service delivery - do the right thing, at the right time, in the right place, for the right reason, the first time.

Fishing Ponds: Getting the right volume of guests from the right sales channel

Hotels either supply rooms to OTAs or the OTAs take your inventory from the GDS or another system, the more control you have over how they access your availability, the better you can control the price of the rooms and ensure you get the best revenue you can at the least cost.

Asses each channel and understand the value each will bring. This is where customer data insight is key. You're no longer watching the people pass the travel agent shop and understanding who they are and their needs, instead you're looking at the demographic and geographic information gathered through web analytics. Faces are removed and data becomes essential.

While in this approach the personal touch is removed, the facts are more apparent and help you better identify the reality of each channel and the wider business opportunity by actually seeing the buying behaviors of these travelers.

These channels are your ponds and having selected the right ponds that will bring the right type of fish for your hotel, you can now promote your presence. And in this case it's good to have as many ponds (online distribution channels) as possible.

Fish Bait: Capture the booking and get the best value for it

Location of your hotel has always been key, but now you have to make sure people can find it when they are sat at home thousands of miles away. You need to attract people to your hotel anyway you can, and knowing more about what is happening in your local area relevant to the type of guests you are pitching for in the ponds you have selected will help secure those bookings.

Here you are now taking advantage of digital communications and the data that is at your fingertips. Highlight the main events and attractions surrounding your property and make this information prominent to all searching travelers. Emphasize the facilities you have to offer including those in your immediate surroundings. Understand where your customer-base comes from and where they go after their stay, this information will open other doors of opportunity to sell the right package.

Managing your content on all online distribution channels is vital. Consistency is key! Just like the days of providing a brochure, this brochure is now in the virtual-sphere and placed across all your different channels. In the past travel operators working off green screen could rarely show a photo, or if it was in a printed brochure it was small single image. Now you can branch out and offer much more imagery. Always select a portfolio of pictures which is used on your brand website, promote the same on the OTA sites - never load different pictures on different sites as this creates confusion and displays untidiness.

Your write-up about your property, rooms and facilities should be the same and consistent across all channels of distribution. Never forget content is marketing and marketing builds reputation, the consumer's purchase decisions are based on reputation.

*Fish Capture: Secure the booking**

There is one key way to achieve this - Pricing your product in line with the current market conditions. Pricing should be seasonal and highly focused on adjusting rates during the troughs and peaks within the seasons. Understand demand and forecast demand. Subscribe to the newsletters of all major airlines that operate in your city. Know when they advertise special fares into your area and "piggyback" them by promoting your own specials; your competitor is probably doing it already. You will find that when the airlines are in distress, Hotels are in distress too.

Seeing the market rates in real-time across multiple channels and competitors for multiple date ranges will help you keep on top of your rates at all time to aim to control progressive pricing. Just like airlines, you need to push your rates up from the beginning and never give in. You no longer sell at a fixed price all year, but dynamic pricing is essential to keep up with today's hyperactive travel consumer.

Profiting from Bookings

Each guest will now come with its own associated value and you need to make sure it balances the books. Pay close attention to achieved rates, ADR (average daily rates) and your RevPar (Revenue per available room). Room rates should be set according to these achieved statistics and kept realistic in your market.

Sales strategies should be aimed at the customer, their needs and the current market conditions, considering what the achieved rate was for the same period. Consumers behaviors and attitudes will change dependent on the time of day and time of year, be aware of these and know how to work them best for your property. In a global economy where people have access to your hotel from anywhere, time zones may become irrelevant, but may also work to your advantage.

Driving Revenue for Progressive Pricing

Understand your booking window. This type of information is easily obtainable from the different distribution channels. Promote early bird specials instead of last minute deals. Consumers have grown comfortable with this last minute selling technique. Last minute deals are not about maximizing revenue; it is all about minimizing revenue.

Manage your inventory correctly. Offer different minimum stay and maximum stay promotions. Assign only the minimum required amount of allotments to Agents and Operators and take heed, along with allotments are fixed rates.

Furthermore, consumers have taken to sharing their thoughts and opinions with every- and any-one around the world, whether positive or negative with no disregard for the business. Therefore it's essential to manage your reputation and invest in all guest feedback you receive. Consumers shop and base their final decisions not only on price, but what people say about your property.

Changing Working Methods to Meet Your Business Needs

The Revenue Manager certainly has a daunting task ahead if this is all still managed manually. Updating content, price and availability steals the focus away from strategizing, planning and making real decisions that will maximize your revenue. Begin automating your "fishing techniques" for the benefit of your business.

The hotel industry is suffering the great "Tech divide", if your property does not have all the systems needed to manage these sales channels, pricing, customer data and marketing requirements you will struggle to survive.

Hotels need to manage all the aspects of online distribution, analyze the market, calculate rates, monitor rate parity and position, distribute rates and availability to multiple distribution channels and manage all online reviews. Hotels need to be connected to these pools 24/7 to send and receive the market data to make more intuitive pricing and distribution decisions, through a single source.

This is where you can change the tide on the impact that digital and virtual communications has had on your physical business and take ownership of your sales once again. Social interaction is not what it was and may never be. But access the data from how consumers interact online and you are better placed to take advantage of their buying behaviors, providing them exactly what they need, when they want it, for the price they are willing to pay.

An expert in the fields of hospitality and electronic distribution, Michael McCartan joined Duetto as Managing Director for Europe, the Middle East and Africa in 2014 to spearhead the rollout of the company's products and development of Customer Success teams throughout the EMEA region. Since joining Duetto, he has grown the European headquarters of Duetto in London, as well as establishing teams in Germany and Dubai. Mr. McCartan is adept at engineering creative solutions and then executing their delivery, understanding the exact needs of the client and the challenges surrounding the market. He is a valued member of the HSMAI Europe Revenue Management Advisory Board, contributing to articles and leading seminars and keynote sessions for the association. He is also a frequent speaker and panellist at major travel industry events across EMEA. Mr. McCartan can be contacted at +44 7557968806 or michael.mccartan@duettoresearch.com Please visit http://www.duettoresearch.com for more information. Extended Bio...

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OCTOBER: Revenue Management: Technology and Big Data

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Hotel room night inventory is the hotel industry’s most precious commodity. Hotel revenue management has evolved into a complex and fragmented process. Today’s onsite revenue manager is influenced greatly by four competing forces, each armed with their own set of revenue goals and objectives -- as if there are virtually four individual revenue managers, each with its own distinct interests. So many divergent purposes oftentimes leading to conflicts that, if left unchecked, can significantly damper hotel revenues and profits. READ MORE

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For years, hotels have housed their Revenue Management systems on their premises. This was possible because data sets were huge but manageable, and required large but not overwhelming amounts of computing power. However, these on-premise systems are a thing of the past. In the era of Big Data, the cost of building and maintaining an extensive computing infrastructure is incredibly expensive. The solution – cloud computing. The cloud allows hotels to create innovative Revenue Management applications that deliver revenue uplift and customized guest experiences. Without the cloud, hotels risk remaining handcuffed to their current Revenue Management solutions – and falling behind competitors. READ MORE

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