SUPPLIER ARTICLE
IN THE AGE OF TRANSPARENCY, HOW DO HOTELS PERSONALISE PRICING?
Hotels must be nimble and ready to react to keep one step ahead of online reviews, says Warren Mandelbaum of IDeaS Revenue Solutions
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oday’s hotels are faced with the reality of an increasingly complicated distribution network. As a result, the amount of infor- mation available to consumers means there is more competitive pressure than ever before. Over the past 15 years, the London market
has shown 50% growth in supply, equating to approximately 50,000 rooms. Very impressive, given the strong revenue per available room (revpar)growth in that market over the same period. Yet how do you continue to differenti- ate a product, while also providing a person- alised experience, both during the booking process and on-site to guests? Guest transparency evolves every single day.
Guests know instantly what other people think of a hotel – whether it’s housekeeping services, the location, the on-site restaurant or the pool. And they can find this information faster than you can read this article, which also means they can find a dozen different prices for a hotel (all potentially offering unique values), with just a few clicks of a mouse. However, there are also many variables beyond price as to why a guest will book. In
16 | Technology Prospectus 2017
“Guests know instantly what other people think of a hotel – whether it’s housekeeping services, the location, the on-site restaurant or the pool. And they can find this information faster than you can read this article”
this modern age of transparency, does your pricing strategy take into account these differ- ent variables while achieving the maximum amount of revenue? Does it deliver the ideal price to the ideal guest at the ideal time? Transient pricing has traditionally been anchored to the best available rate (BAR). Recent intelligence has shown that in growing markets such as London, BAR revenues have grown by more than 235% since 2000. While that is something worth paying attention to,
what does that mean as the consumer becomes more digital every day and we wait in suspense for a major change in the economy? It means hotels, now more than ever, must be nimble. They must be able to adapt and antic- ipate change or they will miss out on that revenue opportunity. Already, with our last major downturn in the economy, the industry has trained today’s consumers to shop for rates other than BAR. OTAs capitalised on this, and so have other disruptors in the industry, which has caused hotels to re-think their direct booking strategy. Despite BAR’s growing production in key markets, is it going to go the way of the rack rate? With the onset of major brands driving loyalty programmes, will the lowest-tier loyalty rate become the new BAR? The answers to those questions remain to be seen, but no matter how hotels decide to price transient rates – or how personalised those rates become – deploying the most ana- lytically optimal price available to their selling systems will be key in anticipating shifts in the market and in keeping a competitive edge.
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