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Technology


calling the hotel or the reservation centre. But the internet changed all that in the 1990s and online travel agencies such as Booking.com and Expedia became a primary way for consumers to shop and book rooms. Now these distribution companies have grown to the point where their market values are higher than most hotel brand companies. Today, effective revenue management


Revenues revolution F


or a long time, hotel marketing was fairly simple: bookings mostly came from guests walking through the door,


practices are critical for hoteliers to manage their inventory, market their hotel to the right audience and dynamically price rooms to optimise revenue. Driving revenue has become a property-wide mission, and revenue managers must be at the forefront, collaborating with sales and marketing, operations and ecommerce departments. Moving beyond traditional revenue management to a more holistic strategy is critical to survive and thrive in this new digital world. As distribution complexity grows, so do hoteliers’ needs for sophisticated solutions. And competition in the travel booking space isn’t slowing. Hotels must continue to educate themselves and make sure they have the right systems.


Rate parity agreements To combat price undercutting by either side, hotel suppliers and third-party distributors have long agreed on a practice of rate parity – offering the same room at the same price across the various channels. The practice has been in effect for 15 years until recent rulings in Europe have begun to end this practice in some markets. Rate parity has been fading and the rise of mobile and last-minute channels has led to a wider range of rates. Smart hoteliers are already using fences to segment their most loyal customers and offer them personalised rates. Many hoteliers are celebrating the


end of rate parity, but OTAs and their billion-dollar marketing budgets still have a firm grip on distribution. If hoteliers try to push higher rates through third-party channels, it is possible OTAs could flex their distribution muscle. They control which


28 05.11.2015 Hoteliers are having to adopt new approaches to revenue management. Below: Michael McCartan


hotels show up on the first pages of searches and which appear on the fifth. Look at what Booking.com chief executive Darren Huston said in the firm’s most recent earnings call: “We will never charge our customers more. So we will adjust to whatever environment it is and we’ll make sure that we get the best pricing for our customer. And in some cases, we have so much innovation we could do to make sure our customers don’t get shown prices that are uncompetitive.” Hoteliers should prepare for a post-


About Duetto


Duetto’s predictive analytics platform enables hoteliers to better understand their business, accurately forecast demand and proactively price for more profitability. With a cloud-based, software-as-a-service model, hoteliers have the tools necessary to regain control of their inventory and rein in acquisition costs. Since launching in 2012, Duetto has signed nearly 1,000 properties in 50 countries. In October 2014, it opened its European HQ in London.Find out more by visiting the team on stand TT228.


parity world by ensuring they have complete control over pricing across all channels, independently and in real time. They will have to walk the fine line between giving travellers a reason to book direct without alienating themselves from the OTAs.


Google and TripAdvisor Google has been seen as a disruptive and potentially costly threat to hotel distribution. In the past five years, the search-engine giant has slowly moved into the space. Its initial play was making booking hotels easier for their users, and the company wasn’t overly concerned where they sent that traffic. But the lure of the lucrative third-


party distribution business was too hard to resist and Google recently announced that it will open up the availability of its commission-based Book on Google


From TripAdvisor bookings to rate parity collaboration, the hotel industry is rapidly changing its approach to revenue strategies. Michael McCartan, Duetto’s managing director, EMEA, looks at how technology is giving savvy firms the edge in winning market share


platform, making Google another channel in which hotels must distribute inventory and pay for demand. The move follows the introduction of


TripAdvisor’s Instant Booking service (now called Book on TripAdvisor), which launched at the end of last year and turned TripAdvisor into another booking channel charging up to 15% commission. It’s hard to believe that these new channels will reduce the number of third-party bookings over the long haul.


Big data’s helping hand Fortunately, as more intermediaries fight for a bigger piece of the online pie, hoteliers are responding. Innovation doesn’t have to be left to the OTAs and many hoteliers are taking advantage of new technologies and data sets to better understand their customers. For years, revenue managers have used historical and ongoing booking information as the basis for their forecasts. By charting only the past and present, hoteliers have had limited visibility into the future. That information is valuable, but


there’s a wealth of new consumer- centric data that can paint a far more accurate picture of demand much further into the future. Rather than measuring only those customers booking a hotel, truly unconstrained demand should include the universe of everyone shopping in the market. Savvy hoteliers are tapping into


social reviews and ratings, airlift data, weather, and even web shopping information. Tracking that lost business – those consumers not only booking on a hotel’s website but those abandoning before booking or being turned away because of availability issues – provides incredible insight into demand and price sensitivity. If you’re only tracking actual


bookings, you’re missing a huge piece of the puzzle. Two dates may both have five bookings, but a closer look tells a different story: what if one had five conversions out of 100 shoppers, while the other had five out of 10? That’s a huge difference — and valuable information that can lead to more accurate forecasts and optimal pricing to maximise revenue.


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