H & C News is pleased to publish the second in a series of articles authored by experts from Buell Consulting Group who participated in the panels and seminars at the recent Independent Hotel Show. The articles will assist independent hotels to address the challenges facing their businesses in the competitive UK market.
Ally Dombey, Director of Revenue by Design Ltd, was a panellist at the Industry Issues theatre on Global Customers, and explains below some of the key points and issues that emerged from the panel.
- Different guests have different buying and spending patterns.
The less sophisticated, less confident traveller is likely to buy through an agent or tour operator. In these cases, they are often buying through a fully inclusive rate, meaning that meals are already paid for, and the potential for additional spend at property is limited.
More sophisticated travellers are happy to book independently and more frequently on a room only or B&B rate – offering more opportunity for upselling at the property.
For example, travellers from China are more likely to book on a fully inclusive tour which means that spend on property has already been accounted for.
Conversely, more seasoned travellers – such as those from the USA – will tend to be more confident to book directly with the hotel.
- Distribution strategies need to adjust to attract travellers from different regions
- CTrip is the largest OTA in China, with over 40% channel share
- Expedia is by far the dominant OTA in the US, but trails Priceline globally due to the huge market growth in Europe of Booking.com.
- Each channel needs to be researched for its market share and its potential to attract the international visitor.
- OTAs become your international sales representatives.
For hotels that cannot afford international representation, the OTA presence in international markets provides a route to market to the international traveller. View the commission paid to OTAs as a marketing cost. The OTA can represent a risk free way of moving into an international market.
- Rate Parity
Related to room only sales by online travel agents
- Under the proposed new commitments from the OFT, online rivals to Booking.com and Expedia will be free to use their commission revenue or margin to offer lower prices within a closed user group of repeat customers and to UK residents only.
- Good for OTAs, but bad for hotels offering discounts to best clients?
- Rate Parity remains for bookings made by the general public
- Result? – new battles for the returning guest and repeat guest
TripAdvisor and booking referrals to other sites
- Recent study by WHIP amongst over 15,000 guests, shows that TripAdvisor is the top referrer for direct bookings, followed by Friends and Family, then followed by OTAs
- 40% of traffic comes from mobile users, more than 69 million downloads of their iPhone and android app
- TripAdvisor’s new product, TripConnect, will allow hotels to bid for placement alongside OTAs via connected booking engines. As of September this year, over 280 booking engines had signed up for connectivity with TripConnect, with over 70 having completed the integration.
Advertising Spend and traffic
- Priceline ad spend = $1.14 billion in 2012
- Kayak sends 57 x more traffic to OTAs; TripAdvisor 11 x to OTAs
Mobile
- In Mobile, there is no hotel group in the top 15 hotel app download charts
- Hotel brands are also trailing badly in user satisfaction levels
Social Media
- STR study in association with ReviewPro showed that a 1 point increase in Review score leads up to a 1.4% increase in RevPAR with associated occupancy and rate gains.
- Review metrics in the form a Global Review Index can now be included in a revenue strategy, and tracked alongside pricing decisions.
- Your Global Review Index presents your review score as an index of the aggregate review scores of your competitor set.
Pearls of wisdom
- Get under the bonnet of what’s happening in Search – there are some game changers that are worth investing in. TripConnect and Google’s Knowledge Graph – the carousel of images could put your hotel images up at the top of the search results if Google Places is expertly managed. Cannot ignore or this will just shift share to your competition – look for the best opportunity for conversion across channels.
- Keep the guest your own – extend hospitality with new social media tools, create your own community – there will be increased competition for the returning guest, so this has to be expertly managed.
- Total revenue management – start to look at GOPPAR rather than just RevPAR – incorporate PPC campaigns into GOPPAR models, plus all other costs of distribution into your revenue strategy
About The Buell Group
The Buell Group is the single largest advisory and service resource for the hospitality and leisure sectors in the UK.
The range of expertise and resource that it is able to bring together under one umbrella makes it unique and provides clients with much more than conventional consulting.
The Buell Group is made up of three divisions; Buell Consulting for hospitality advisory support; Buell Talent for senior hospitality recruitment; and Buell B4B for relevant services.
The portfolio of services provides a comprehensive response to any requirement operating businesses or investors may have and specifically covers Operations, Support Services such as Sales & Marketing and HR, and Legal and Professional. Also offered is a range of bespoke products including:
- Business Start Up
- Business Acceleration Programme
- On-Board Advisory
- Fit for Purpose Technology
- Strategic Business Review
- Business Recovery
The Buell Group essentially provides a multi-layered, one stop resource for business whether they require expertise in one area or many.
For more information click here