Sponsor’s comment: IDeaS Revenue Solutions
A pioneer and global technology leader, IDeaS Revenue Solutions offers industry-leading pricing and revenue software, services and consulting for businesses of all types and sizes in the global hospitality and travel industries. Founded in 1989, IDeaS has been serving the hospitality industry for over 20 years, having even been called on by industries as far-ranging as parking, air travel, transportation and event ticketing. We transform the right data into clear and actionable insight, so that our clients can price, forecast and report with speed and confidence, improving business performance. Our solutions drive thousands of pricing decisions every second for hospitality businesses across the world. IDeaS was acquired in
2008 by SAS, the leader in business analytics software and services, and the largest independent vendor in the business intelligence market. Headquartered in Minneapolis, Minnesota, and with our Global Technology Centre located in Pune, India, IDeaS maintains sales, support and distribution offices all over the world. Throughout our history, our
mission has been the same: make revenue management so user-friendly, insightful and profitable that revenue management professionals wouldn’t dream of doing it another way.
series/airline business and the displacement of other revenue that may potentially produce a greater yield,” Mandelbaum notes. “IDeaS, as an example, allows hotels to analyse data prior to deciding whether to accept or decline volume business by evaluating a group and its total value contribution. “In addition a ‘what-if’ scenario simulation ascertains the net profit/loss of any intended marketing campaign so a change in strategy, such as lowering a rate over a period of time, can be modelled to see the effect it will have on your business prior to putting it in place.” As Brian Reeves, chief executive of GOPPAR Digital, says: “Adopting a total revenue focus is the right option for hotels, not just for the insights gained, but because looking at over- all profitability in this way will mean that you engage with channels differently and assign marketing budgets in a more intelligent way, seeking out the more profitable customer. “For example, Mr and Mrs Smith may appear to have similar net rates to
booking.com when looked at from a rooms revenue perspective (due to today’s rate parity environment), but when you consider the customer types each channel delivers and their propensity to spend additional money on property, the channels may now appear quite different.” The key to getting started with a total
revenue management strategy is to ensure you begin with ‘clean data’. “An integrated suite of systems will consolidate all the information feeds required, allowing you to analyse what the data is saying and make decisions based on scientific evidence,” Mandelbaum advises. “Leaving behind reports and spreadsheets to have fully integrated solutions saves time and increases performance.”
MANAGING OTAS Unfortunately, there is no definitive answer to hoteliers’ biggest question: ‘What percent- age of business should come through OTAs?’ It depends entirely on the property. “Hotel chains with established marketing and loy- alty programmes rely less on OTA business and see a 20%-25% reliance, while indepen- dent properties that do not have the ability, budget or requirement for investing in their own marketing spend receive up to 76% OTA business,” Mandelbaum notes. What’s important is looking not at the com-
mission percentage per channel alone, but the net profit per channel after cost of acquisition. “Too often I have seen a hotel’s unease in having too much OTA business purely based on the high commissions and excess levels of cancellation making operations difficult. However, when compared with wholesale or airline business, after breakfast, taxes and lack of spend in the hotel outlets, it is often the case that the hotel would have been better off taking even more OTA business and paying the nego- tiated commissions to receive a much higher net yield,” Mandelbaum explains.
Bringing revenue management, distribution and marketing together
When GOPPAR Digital partners with a hotel client, the start point is always bringing revenue management, distribution and marketing into the same conversation, with the goal of boosting net revenue across all channels of sale. And this was no different with AB Hotels. “We partnered with GOPPAR
Digital to bring their expertise into our team at the Arch with the goal of driving net revenue on
14 | Technology Prospectus 2017
brand.com and OTAs,” recalls Rafi Bejerano, director of AB Hotels. The first steps were to look
at
brand.com marketing and to evaluate the production of the OTA channels being used, making refinements to each to improve the hotel’s performance without compromising on rate, the ultimate goal being for the website to dominate room night production. “To that end, we have made some strategic decisions on how
and when to do particular things with OTAs and have introduced some new channels for last minute bookings,” Bejerano notes. Ongoing areas of focus include
content marketing to improve organic search performance for the brand website; refinements to the hotel’s PPC strategy to expand its reach within a defined cost per booking that can be controlled and flexed according to the forecasted occupancy; understanding the
nuances of OTAs and how to make tweaks that improve bookings without affecting rates; and introducing new channels for last minute bookings. “We meet regularly to review
performance, and we review our strategic approach each quarter,” says Bejarano. “I am pleased to say that this is paying dividends. We finished last quarter 71% up on net revenue through
brand.com and OTAs.”
www.thecaterer.com
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