BEST PRACTICE: Reservations and the digital world

Posted by: Romain - Profit Therapy
18 Nov 2012
In determining the efficiency of Reservation and Hotel Bookings, I see lots of Hoteliers colleagues commenting on the revenues generation, but I did not see any comment on the Profit generation. In fact most hotel booking online travel agencies will collect anything between 18-30% commission on a booking. By far, a strategy that encourage guest to book via the hotel brand website is the best strategy because your transaction cost per booking towards company such as Travel-click or other Internet Booking Engine can go as low as 1.5-5%. It does not simply require a Hotelier to state a rotative banner on their website mentioning"Best Rate Guaranteed" to gain web user trust....There are so many cases in Gulf countries, where the best rate guaranteed is violate by another online travel sites. Why? because it all depends on your pricing strategy back at the contracting season, and also the synergy between a Director of Sales and a Revenue Manager, to some extent a E-Commerce Executive. It has to be lead by strong actions plan distributed to all concerned Front of the House departments. How do you think Marriott, Starwood, Hilton and Accor have succeed driving 55-65% of online booking through their own channels. They have invested lots of money back in 2003-2005 to drive that change, with attractive websites, URLs placement tactics in every single corner of the hotel, site reviews on their site (Sheraton in 2005-2007). The main difference lies for the big chain corporate office that majority of top marketers do not come from necessarily from a Hotelier background, and more from FMCG or Retail environment. It's not rare to have the top marketing person in Starwood to comes from Coca Cola, IBM.....Those big chains can lure future hotels investors in a nice way, because they can ensure investors to get their money back since Big Chains controls their distribution channels. Hoteliers are facing the question whether they would like to favor a short term strategy with a marketing driven OTA, that bid the hotel keywords in most search engines, leaving just few chances for brand and non brand hotels to appear in Google. When I hear some Hotels in Dubai, having 50-60% market share with OTA, that just sounds so scary, for their future business but also for their profitability leaks. When an OTA person called you to place your hotel in a promotion, he/she would have made his analytical work to see what best rates he can get you at, to answer his OTA demand multiple site feeders. OTA have strong sales environment that made them so successful in past years (customer service, hotelier awards, entertainment, ease to use system, special visibility placement per platform...). It would be interesting to have an article about cost per booking transaction trends in Dubai, to place reality next to facts.