Best Western Central Europe Conference 2011 Revenue Management Workshop
Jan 16, 2016
Best Western Central Europe Conference 2011
Revenue Management Workshop
Your trainer for today:
3
Four hours of hard work await you:
Welcome13h00 – 13h30
The Best Western Quizzer13h30 – 14h00
Online Distribution Trends 2011 from a RM perspective
14h00 – 15h00 Rate Management
• Which factors influence our room rates?• How do we differentiate rates and products?• Do you know your cost of distribution?
Coffee & communication break15h20 –17h00
KPIs in Revenue Management Revenue tools to capture KPIs
The end
Welcome13h00 – 13h30
The Best Western Quizzer13h30 – 14h00
Online Distribution Trends 2011 from a RM perspective
14h00 – 15h00 Rate Management
• Which factors influence our room rates?• How do we differentiate rates and products?• Do you know your cost of distribution?
Coffee & communication break15h20 –17h00
KPIs in Revenue Management Revenue tools to capture KPIs
The end
Warm-up: The Best Western Quizzer
Revenue Management Workshop
Online Distribution Trends 2011
from anRM perspective
Online Distribution Trend No. 1
New search options
The ( good ) old Google Display
SEM = Advertisements at a cost
Google Commerce Search•Enterprises Search/ Google Places•Criteria such as location and hotel reviews are important
Organic Search•Internet sites are being offered•Criteria such as page rank, Content are relevant, inbound links, domain name and CONTENT is important
The new Google (beta version)
The traditional AdWords are still around
New AdWords options are available:•Linkages to Google Places•¾ of the page consists of commercially influenced results•Linkage straight to booking sites
Organic Search•SEO is of low importance•Few results at the end of the page (lower ¼)
Google Maps: from bad to worse..
Direct rate comparison as part of the search
results, no need for the clients to leave the page
and pull up Trivago, Kayak etc. for rate checks.
Another fine opportunity to divert customers
Click on hotel name = client will be directed to hotel site???
No, he will be directed to Google Places!
Places Profile is crammed with user
generated content & 1.000 links to
external pages!
An interesting new feature: Google Instant Preview
Google knows my whereabouts
What does that mean for our online marketing activities and budgets?
Our annual budget is the major German OTAs & TOs weekly budget
It is getting increasingly difficult to buy good placements with our limited budgets
Our branches most popular search criteria „hotel“ will get unaffordable
Google Advertising as the only online-marketing activity will not be enough
What are the consequences?
Our annual budget is the major German OTAs & TOs weekly budget
It is getting increasingly difficult to buy good placements with our limited budgets
Our branches most popular search criteria „hotel“ will get unaffordable
Google Advertising as the only online-marketing activity will not be enough
What are the consequences?
Online Distribution Trend No. 2
Niche Marketing: Affiliate &
Recommendation Marketing
Niche Marketing PART 1
Affiliate Marketing – what are we talking bout Affiliate marketing is a marketing practice in which a business rewards one or
more affiliates for each visitor or customer brought about by the affiliate's own marketing efforts. Affiliate marketing—using one website to drive traffic to another—is a form of online marketing, which is frequently overlooked by advertisers.[1] While search engines, e-mail, and website syndication capture much of the attention of online retailers, affiliate marketing carries a much lower profile. Still, affiliates continue to play a significant role in e-retailers' marketing strategies
In concrete terms: We produce advertising material (e.g. banner) A partner manages the distribution on adequate
partner sites A commission is paid whenever a client visits and
books via the affiliate site
Examples of Affiliate Marketing
• Traditional ( banner ) ads• No costs for advertising place• Performance related payments
Niche Marketing PART 2: Recommendation Marketing
Best Western clients act as our ambassadors
More intense and focused than Affiliate Marketing
„I already bought the product“ is THE recommendation seal of approval
Examples for the integration into a website
Integration into the hotel‘s home page
Confirmation page once the client has completed the booking
3 steps to gain a new ambassador
A click opens the widget
1. Teaser with reward
2. Recommen-dation
3. Send
Example: Customer touch point: hotel website
Online Distribution Trend No. 3
User generated contentin motion
Consolidated semantic search for hotel reviews
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Consolidated Hotel Reviews
Example: TrustYouConsolidation of six
portals: HRS, Booking, hotel.de, Trivago, HolidayCheck, Expedia
No linking to external sites away from our own booking functions
User generated content in motion
Law suit A&O Hostels
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User generated content in motion
Sponsored mystery checks by amateurs.. Who is the sponsor?
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Online Distribution Trend No. 4
The end of rate parity?
Rate parity practise under review
The UK’s Office of Fair Trading, a government regulatory body which examines business practice and its effect on consumers and industry, is currently investigating complaints triggered in part by hotel booking firm Skoosh in September 2010 over hotel room pricing on travel websites.
British newspaper The Daily Telegraph named three major hotel groups last weekend as being involved (though not confirmed) in the OFT’s investigation – a probe which is looking to establish whether a breach of both UK and European competition law has taken place when hoteliers have asked hotel distributors to charge the same price across websites.
“Rate parity” is frowned upon by many as it restricts the ability to differentiate a product based on price. Others simply call it “price fixing”.
Rate parity law suit UK
Online Distribution Trend No. 5
Tour Operator Business goes online
Rate parity – increasingly hard to maintain
www.expedia.co.uk www.thomascook.nl
www.przeloty.plwww.thomascook.fr
www.opodo.at
www.tui.com/de
.. and here is the reason why maintaining rate parity is an issue
TT Showroom
Thomas Cook IBE
Rate & product comparison of various tour operators
Hotel details with photos and descriptions
Hotel reviews of guests who stayed at the hotel
Why do tour operator products appear on rate comparison site like Trivago?
Internet
Lastminute
Pauschal
Hotel
Ferienwohnung
Charterflug
Flugdaten
Reiseangebote
dynamisch
paketiert
Lastminute/Pauschal
IBE Kernel
Veranstalter-Systeme Hotel
Veranstalter-Systeme Flug
Reiseangebote
TOMA
Reisebüros
Frontend
*
Statische Reiseangebote
Kernel Schnitt-
stelleTOMA
Hoteldaten und Berechnungsregeln
* TT-DataMix – Dynamic Packaging-Modul für Reiseveranstalter, online und offline Vertrieb
Hoteldaten und Berechnungsregeln
Why do tour operator products appear on rate comparison site like Trivago?
How can you avoid rate parity issues with wholesaler products
Internet
Lastminute
Package
Hotel
Holiday apartment
Charter flight
IBE Kernel Travel offers
TOMA
Travel agencies
Frontend
Static travel offers
Situation today:TO send contracted hotel products to TT. These hotel products will be displayed in B2C and B2B distribution channels.
Challenge: In some cases the rate given to a wholesaler are better than the rates shown on the hotel’s own website or other portals.
Option: TO can mark the hotel offers that should only display on B2B channels when the send the contracted hotel products. This requires additional programming on both side but the feature is implemented and available.
… or alternatively:
No more static „Rooms only“ rates
for online distribution!§ §BW Germany: as of 2012: central negotiations of the basic contract conditions as a frame for the
individual hotel negotiations
+
New products of online distribution
What are our options?
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Pro‘s & Con‘s of various distribution channels
We alone decides on products & distributionNo competitive environment
Limited reach/ contatcsA reasonable marketing budget is a must
Self Distribution
Excellent reachExcellent presence in search engines
Distribution costs hard to controlFew portals for leisure products
Online-Travel Agencies/Portals
Very high leisure travel competenceStill No. 1 booking option for leisure travellers
Relatively high margin / Only limited number of hotels, limited product flexibility
Traditional Tour Operators
Very high leisure travel competenceCan generate demand in need periods
Extremely low profit margin Distribution partner selects hotels
Direct Marketers
Clear distribution structure, 10% CommissionEasy to maintain.
No leisure bookingsNot very user friendly handling & content
GDSs
What leisure products are best sold in which distribution channel?
Self Distribution• Basically whatever we are able to display and sell on our own site• Focus on marketing of exclusive products (Rate but no product parity!)
Online-Travel Agencies/Portales•Straight, simple products, clear rate structure
• Long booking periods, no seasonal products, Maintain rate parity
Traditional TOs• Leisure products , with multiple components, fixed rates, allotments, etc.• No room only rates
Direct Marketers• Products with low profit margin but high volume. No risk of segment mix.• Contracts may contain exclusivity clause. No self distribution of product
possible.
GDS• All standard rates (RATES not products), self explanatory, commissionable• No high revenue expectation
One product for all distribution channels?
TOs
Direct Marketer
GDS/Travel Agency
Online-Travel Agency/Portale
Self Distribution
One product for all distribution channels?
TOs
Direct Marketer
GDS/Travel Agency
Online-Travel Agency/Portale
Self Distribution
We are in the process of creating new products
Best Western Conference Central Europe
Rate Management asthe key component of
Revenue Management
What factors influence our pricing?
The ingredients of pricingThe price differentiationThe market segmentationThe distribution channelsRevenue - Costs = Profit
The ingredients of pricing
Price differentiation
The basis of Revenue Management: Rate Integrity
Price segments
non confidential rates: BAR, SR, Early Web Special
confidential rates: Opaque, Tour Operator, Wholesaler
contracted rates: BBS, BBSL, LCR, Consortia, MICE,
conditioned rates: Packages, Promotions, Gov/Military
Price conditions
Tour Operator Rates
Calculation:
Net rate + Margin = Rate to consumer Gross rate - Commission = Net Rate
Margin approx. 25% off BARBookable via catalogue and various electronic
distribution channelsRelevant for electronic distribution:
Online catalogue rates can cause parity issues with retail & merchant channels
Wholesale Rates
Calculation:
Net Rate + Margin + Margin = Rate to ConsumerMargin min. 30 %, due to higher costs for e.g.
the production of B2B confidential catalogues, payment processes with the intermediaries/re-sellers, production of travel documents, etc.
Bookable via catalogue and various electronic distribution channels , e.g. Octopus Travel
Relevant for the electronic distribution channels of the wholesaler’s B2C portals: rate parity
Wholesaler
Careful evaluation of the cooperation with wholesalers like Gulliver‘s, hotelbeds.com, transhotel etc.
Protect rates by conditioning the publication on electronic consumer portals, e.g. by adding a minimum-mark-up in the contract
Today‘s Online Distribution Landscape
Self Distribution
Retail Portals
GDSs
Merchant Portals
TO Portals
Four elements on your way to a strategic rate and distribution strategy
Four elements on your way to a strategic rate and distribution strategy
Four elements on your way to a strategic rate and distribution strategy
Knowledge is the key
Best Western Central Europe Conference 2011
The“Costs of
Doing Business” Exercise
The costs of doing business
How to re-gain price control
• Establish and improve price knowledge
• Establish, communicate & train price strategy
• Enforce rate conditions on all distribution channels
• Thoroughly examine partner contracts
• Respect framework contract conditions
• Regularly evaluate distribution channels
• Where ever possible: strengthen self distribution
Best Western Conference Central Europe
Revenue Management KPIs
Revenue Management KPIs
The Forecast Calculation
Case Study Forecasting
Best Western Tool for Forecasting
Revenue Management KPIs
The Group Displacement
Calculation
Definition: transient business is being rejected because group business has been accepted
Necessary KPIs: Length of Stay Room Revenue Meeting Rooms Availability/Occupancy/Estimated pick-up F&B revenue
Case Study: The Group Displacement Analysis
Case Study The Group Displacement Analysis
Best Western Tool for Group Displacement Analysis
Best Western Central Europe Conference 2011
Revenue Management Workshop:
THE END
ANY QUESTIONS WHICH ARE YET UNANSWERED?
IF NOT,
…there is always a way out…