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Mr. McCartan

Revenue Management

Adapting to the Ultra-Connected Guests - Are You in Sync?

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

Mobile computing has changed the world. Powered by exponential popularity of smartphone, by the end of this year, it is expected to overtake desktop internet usage. One in every five of world's population, i.e. 1.7 billion, has a smartphone - half of them use it as their primary internet source. Information is available 24/7 and plays a determining role in how people interact and buy. According to a study by Google, the journey to book a vacation begins on the internet with the traveler visiting on average 22 sites prior to deciding on the destination. Consumers are better informed, better-connected and better-engaged across multiple platforms. Hoteliers need to be visible at every touch-point to entice them to their properties.

Multi-Channel Distribution

Clearly, the challenge for hoteliers today is not restricted to competition anymore, but goes far beyond that. Travellers today are spoilt for choice when it comes to information - they can research, price check, review and book the room at anytime from anywhere in the world through third party websites, social networks and direct booking engines. Hoteliers need to understand the consumer's journey towards purchase, from research to decision to reservation. From traditional OTA to flash sites to meta-search to auction - everyone is in the race to get a share of the travel buying market, and thereby causing more confusion and challenges for revenue managers. The days of working with one agency are over, the industry is extremely competitive, and the concept of selling rooms has been replaced with selling an experience. The key to success lies in consumers' attention time and being visible across as many popular and relevant consumer websites as possible.

Are You Connected to the Meta-Search Engine?

The hyper connected travelers want to be assured of the best prices and the greatest value. No matter what is being offered, they will compare rates; and will check at least six sites (Source: e-Marketer) to get the best rate. Meta-search channels, which have grown in popularity in recent years, send user requests to several hotel booking websites and aggregate the results into a single list and displays them according to the rate available on each source site. 28% travelers today use meta-search for rate shopping. Ignoring these channels would mean ignoring a sizable number of visitors who can be turned into direct bookers with little effort.

Automate Your Online Distribution

For some time the proliferation of distribution channels has meant it was not viable for the Reservation or Revenue Manager to handle OTAs manually to ensure revenue optimisation and pricing integrity. Now the advent of mobile applications has significantly shortened the booking window, and popularity of same-day booking channels like HotelsTonight.com coupled with the continuing dominance of the traditional OTAs have added further complexity to the revenue managers' decision making. Without doubt, the divergence of online distribution channels has opened up a window of opportunities for hotels, but along the way, also created a dilemma for hoteliers - how to react to market dynamics immediately for all sales channels while maintaining profitability. One wrong rate decision and a hotel can face huge revenue loss, brand devaluation or a downgraded ranking and penalty from the distributors.

Pricing data is essential to view the marketplace, monitor competitors, benchmark product and position product accurately to optimize yield and revenue. Pricing will become more dynamic and creative as hotels try to differentiate products. An automated revenue management system allows hoteliers to collect and access the huge quantities of data in their systems to analyze rates, market scenario, competitor activities, historical and trend information to achieve the best possible room rates from the most desired guests - all in a matter of few clicks.

Time for XML Connectivity

Sophisticated enterprise connectivity solutions come with XML technology, which enables them to create secure links between hotel systems and electronic sales channels that process online bookings. These pre-connected solutions guarantee real time two-way information flow between the hotels and the third party channels. The live data transfer allows hotels to respond to market conditions and process Availability, Rates and Inventory (ARI) faster than ever before, while the system delivers reservations generated on the channel directly into the connected property management systems.

Reservation Reports, available through advanced channel management and reservation systems, provide revenue managers with an overview of booking volumes from all demand sources broken down into market segment. By analyzing the performance metrics, they can get a clear understanding of buying behaviors - which markets are generating the highest demand? Which channels deliver the most bookings and the highest margin? And which delivers the longer lead-time to book reservations? What type of packages are people buying? This helps hoteliers identify their most valuable guests, their demography and the channel they are using for booking, allowing them to adapt strategies accordingly to maximize revenue. Use benchmarking tools to track the market dynamics and rate movements. Get an overview of how rates are positioned on different OTAs compared to their competitors for different dates on different channels.

Cross-Platform Presence

For majority of travelers, experience begins from the time they begin their research. How hoteliers portray their business and their property is crucial. Consumers do not care whether your priority is on desktop site or application. All they are bothered about is their experience. As they switch from desktop to mobile to tablet, they want to have a seamless experience. Brand experience is not about having a nice website anymore. You need to have a presence in desktop, mobile and tablet applications too. Nearly 45% tourists travel with two or more devices and they are always connected. Working on multiple platforms will help hotels to track individual-level behavior within and across channels, deriving valuable insights regarding consumer behavior and draw an effective marketing strategy.

It's All About Personalization

With Google rapidly moving to personalization of search, the traditional way of marketing needs to take a back seat. Google has been making suggestions based on previous search and purchases for a while now. Major OTAs like Expedia, Orbitz and Booking.com have followed suite. With the latest technology available in the market place, hotels can collect customer likes and dislikes. Access cookies to personalize the online experience, such as recognizing guests' name when they revisit and display customized offers and promotions based on their previous searches. Customer intelligence is key to delivering a customized campaign to your guests. Social media provides hotels with vital inputs to map the customer's state of mind and hence elasticity. The more the revenue manager knows about the price sensitivity of a particular segment, the more he or she is able to price optimally.

The Role of Social Media

As revenue management evolves, it is getting away from simple rate management and is now incorporating customer relations and social media into its strategy. According to a new eMarketer report, Worldwide Social Network Users in 2013 was 1.73 billion i.e. one in four people were connected through social media. And by 2017, the global social network audience will cross 2.55 billion. Thanks to the growth of social media sites like Facebook, Twitter, Google+, TripAdvisor and Yelp, today's guests have developed new habits and high expectations. Sharing is the buzz word and word-of-mouth is working magic just like the good old days - only quicker. There's no escaping the digital revolution so it's best to get stuck in and understand how your guests are using social networking and guest review websites.

A recent survey by Laterooms.com suggests that 90% of travelers would avoid booking hotels labelled as "dirty" in online review sites. Research shows around 81% travelers would not book a hotel before checking out its online reputation at social sites. A strong visible position on guest review websites indicate that your Price Quality Index is working well, that will enable you to make the right pricing decisions based on RevPAR performance. The more satisfied guests you have, the more likely they are to return and spend more money, as well as recommend you to others. Reputation has a positive correlation with the hotel's overall Average Daily Rate (ADR) and revenue. This leads us to the obvious conclusion - integrate social data in hotel's strategic planning. The distribution, revenue management and marketing team need to work cohesively and complement each other.

By definition, technology is all about applying scientific knowledge for practical purposes. Embracing modern technology is a natural progression which hotel industry needs to accept urgently to meet consumer expectations. Those who are agile enough to adapt and innovate will deliver a better consumer experience which will eventually improve brand loyalty and trust. There is no short cut to it.

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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