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Mr. McCartan

Revenue Management

Sharpen Your Hotel Distribution Strategies for 2014

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

2013 was the year the big OTAs got bigger, social media remained elusive, last minute mobile bookings became a reality and meta search went main stream. The hot topic at all the travel trade shows and industry events was how do hotels work with these channels while trying to push more conversions through their direct channels, specifically the brand.com site.

Well, if you think 2014 will be different you are in for a surprise! When defining strategies for the upcoming year, we tend to think that trends would change dramatically. However, that's not the case. While new technology and platforms of distribution may emerge suddenly, the overall distribution strategies should still be based on the channels that offer measurable ROI. Whether it is direct v/s indirect, mobile v/s social, yes or no to meta-search - understanding the intricacies of each of these channels is essential in developing a strategy that will be unique to your hotel. And of course you cannot forget to optimize your channel mix and get 'more for less'!

Here are a few things I consider hotels should look at while drawing up their 2014 distribution strategies:

Mobile & the Rise of Same Day Bookings

The travel industry is regarded as one of the most efficiently managed e-commerce sectors, particularly for its use of various technologies in securing conversions across several booking platforms. One of our recent infographics showed that 65% travelers choose their mobile phone for same day hotel bookings. The rise of mobile users have impacted the business strategy and changed customer behavior largely. While this provides an additional platform for hoteliers to reach out to newer target segments, it also brings along the challenge of understanding what makes these travellers tick. Mobile is certainly gaining ground across the travel space especially in relation to last minute reservations. High end smartphones and intelligent mobile apps have made it easier for users to experience on-the-go shopping and travel booking. Hotels should pick up a trick or two from channel partners and travel intermediaries in this respect - Kayak's mobile apps, for instance, are very popular and have a high download number. It is unlikely that a hotel's own app will attract anywhere near this level of interest but hotels still need to take notice and ensure they add mobile as an important channel for distribution without falling prey to heavy discounting to capture their share of those same day bookings. Smart phones and tablets are going to be the game changer in online travel booking

OTAs - You Just Can't Live Without Them

I came across this phrase some time back and it got me thinking - 'Hotels cannot live without OTAs and they cannot live with them.' Isn't it so true and profound? Since there is no escaping the need for OTAs, it's only obvious to use them to your advantage. The biggest positive that works for third party distribution channels is the fact that most of them are effective in reaching out to customers. They have the resources to spread out far and wide to countries that hoteliers may find difficult to penetrate. Along with that, third party channels and other travel intermediaries are also quick to adopt emerging opportunities to stay ahead in the market. While OTAs may be one of your least profitable distribution channels, they offer you visibility and exposure like no other platform - the 'billboard effect' research by Cornell University has proved it with proper real-life examples. Further, OTAs are your main channel when it comes to tapping price-sensitive customers who are not brand loyalists and are on the lookout for good deals. Take time to develop these relationships and nurture them over time for healthy business benefits.

Meta Search - Where Do They Stand?

Meta search is becoming mainstream with the likes of Google Hotel Finder, TripAdvisor, Kayak and Trivago, among others, attracting a lot of attention and driving bookings. But before we delve deeper into how to leverage it let us understand the basic premise on which it works. It's a simple concept - meta search sites neutrally compare various travel sites / sources to give travelers the best overview results of their requested search.

However, all is not what it seems. The big twist comes in the form of the bid-management process. Basically, metasearch sites control the ranking of OTA and hotel websites within the hotel search results based on the value of bids each website has paid for the search keywords.

The big OTAs have much bigger marketing budgets than the hotels and are able to outbid even the big chains on important keywords and as a result hoteliers are losing out on the metasearch sites. So, if you want to go the meta search path, you will either need to invest time and resource in understanding the bid management process and distribution of keywords or else you will want to partner with a digital agency who can set-up and manage the whole thing for you. Knowing the return on your marketing spend is vital. It may happen that low-priced keywords bring you higher rankings and hence more clicks.

Either ways, as a hotel, you will need to analyze and evaluate the strength of meta search sites as a traffic source and also monitor the click-to-book ratio generated from it. Get it wrong and the metasearch sites could be very costly for your business. My suggestion is to start with baby-steps and progress from there. Social Media and Online Reviews sites - are they really distribution platforms?

Over the last few years, a lot of debate has taken place over whether Social Media is a distribution channel or not. While some of the leading industry experts believe that social media is meant for networking and customer engagement - it does not have the specifics needed to be a full-blown sales channel. On the other side of the divide, there are a whole bunch of travel professionals who believe that social media including Facebook is an upcoming channel - they have actually done research to establish the travelers booking behaviour on social sites.

I, for one, would like to believe that any channel that offers exposure, visibility and an option to make reservations can be considered as a valid sales channel. Though it is to be seen how effective this platform is - but nonetheless - it does have its fan following. I came across an interesting US-based study which interviewed a set of travelers on their browsing to booking journey. One of the results stated that around 21% of those surveyed have used Facebook to search for hotel information at least once. In addition, 13.8% of them had used Facebook to book a hotel room. When you have facts coming directly from travelers, you do tend to believe the capabilities of a channel to attract relevant eyeballs.

Getting back to the broader picture, social media sites which have a strong travel B2C focus are mainly Facebook, YouTube and Twitter. Though Pinterest has been in the news sometimes, I have not really come across any conversion data from the site.

Moving to online travel review sites, they are basically electronic word of mouth and definitely hold a clout among all social channels. With TripAdvisor being the Big Daddy in the travel review business, a lot of statistics are available on how a one-point increase in rating positively affects the probability of booking. As LateRooms research suggested, more than one third of consumers will not book a hotel room without reading reviews first - such is the power of guest feedback.

Even if you wish to procrastinate over your social media efforts, you need to wake up to the need of generating and monitoring guest reviews (i.e. if you are not doing that already!). Today, various tools are available to help you easily monitor the relevant review sites and directly respond to guests - invest in such tools to make the process easy for you and your team. Good reviews are like your brand ambassadors - they get you more revenue without you even realizing it.

Direct Online - Your Ultimate Distribution Missile

There is nothing like bookings coming in from your brand.com site! Every hotelier aspires to drive as much revenue as possible through the brand site. But how do you get the traffic? How do you fend off competition from partners who are also selling your rooms online? While this has been an ongoing discussion and various suggestions have been shared by leading experts - I will put forth some of the key points that I think are relevant to all accommodation providers.

Starting with the brand.com site - it is important the site layout be simple and user-friendly with logical navigation for guests to making bookings in a few clicks. Visually appealing pictures and impressive content helps in retaining interest while new visitor flow can be increased with healthy SEO management. Further, you may want to invest in proper website data analysis to identify new opportunities and see which regions / market segments are driving more traffic - this will help in developing customized marketing plans to attract these guests.

Loyalty programs with a specific 'closed-group access with benefits' for members should lead to regular guests making reservations directly on the brand website. The importance of mobile has already been discussed earlier - but to reiterate - invest in a mobile site for guests who like to book you through smartphones and tablets.

And last but not the least, like OTAs - spread the message that your brand site is the best place to make bookings to get best rates and last room availability for your hotel. Let this be your mantra to success!

To Summarize

My understanding is that the above points will resonate well with hotels - whether they are a small budget hotel, mid-scale business property, branded hotel chain or resort or any other accommodation provider. Distribution strategies and its associated challenges need to be prioritized and resolved based on the hotel's capabilities and strengths. Further, with the advancement in technology, it is imperative that hoteliers open their thoughts and adopt innovative ideas and approaches to implement solutions that can be their partners to success.

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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Coming Up In The November Online Hotel Business Review




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