Capitalizing on Electronic Distribution Trends

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Capitalizing on Electronic Distribution Trends

• WSHLA Conference
• October 11, 2004
• John Burns
• Hospitality Technology Consulting

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GDSs Remain and Evolve

• Still delivering 50 million res annually
• First 10 weeks of 04 -- GDS bookings up 12 vs.
  2003
• 90 of all travel agencies still use GDSs (TW)
• But change is in the wind for GDSs...

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GDSs Remain and Evolve

• Major refocus Merchandising
• Prompted by GDS deregulation and need for revenue
• Paid placement (Galileo Featured Property, Sabre
  Spotlight) and merchant model rates will be
  cornerstones
• majority of agent bookings are made for top 1/3
  of availability display
• Will disrupt our neutral sales environment

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GDSs Remain and Evolve

• Opportunity?
• Use the GDSs
• Keep this sales channel open
• Highest ADR
• Offer Corp, Senior, Govt, AAA, AARP rates
• Review/revise your Property Description file
  (termed the HOD)

5
New Travel Buying Patterns

• Growing on-line booking volumes
• 20, 25, ?
• Increasing pre-purchase research on Web
• 69 of business travelers use Web to plan some
  aspect of their trip, 63 of leisure travelers
  (Yesawich, 04/04)

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New Travel Buying Patterns

• Shorter lead times
• But buying patterns are evident
• Blurring of business/leisure division
• Fences have disappeared
• Small group, family-oriented travel growing
• Togethering

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New Travel Buying Patterns

• Seeking Experiences, Memories
• Niche Services Spa, sports and health clinics
• Experiences Adventure, Romance
• Something the hotel industry has traditionally
  done poorly

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New Travel Buying Patterns

• Opportunity?
• Effective Web presentation vital, decisive
• Would your Web site stand the test if it were
  your hotels ONLY promotion piece?
• Does it say all there is to say?
• How good is your photography?
• Does it answer the questions that your Res, Front
  Desk, Bell and Concierge staff receive?
• Persuasively/ Compellingly?

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Online Marketing Assumes New Priority

• A strong site is an essential beginning
• There are next steps
• Site Optimization
• 70 of hotel searches begin at a search engine -
  40 without a hotel name! (Forrester)
• Search Engine Optimization (SEO)
• Keywords, Metatags
• Paid Placement / Paid Advertising
• Pay Per Click (PPC)

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Online Marketing Assumes New Priority

• Opportunity?
• Use available coaching/counseling expertise
• brand
• representation company
• marketing firms
• judiciously
• Note people upsell themselves, given the
  opportunity

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Emergence Evolution of the Mega Agencies

• IAC (Expedia, Hotels.com), Orbitz, Travelocity
• 1/3 of all Internet hotels sales (PhocusWright)
• Propagating Merchant Model rates
• Challenging (replacing?) traditional travel
  agencies
• Revolutionizing Consortia/Negotiated rates

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Emergence Evolution of the Mega Agencies

• Developing broad product suites
• Leisure
• Corporate
• Expedia Corporate Travel, Orbitz for Business,
  Travelocity Business
• Tour
• Expedia Classic Custom Vacations
• Add-ons
• Next Meetings Groups?

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Emergence Evolution of the Mega Agencies

• Question is not Will they survive? but Where
  are they going?
• Our initial response Denial, then Anger
• They are the Enemy!

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Emergence Evolution of the Mega Agencies

• Our challenge today to work cooperatively and
  effectively with them
• In the end, these are wholesalers
• We know how to work with wholesalers!
• How to proceed? As a group
• Previously the Megas avoided chains, now Rep
  companies
• Why will they talk with us? CONTENT

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Emergence Evolution of the Mega Agencies

• A ray of hope super commissions
• 15-18
• Day-of-week variable
• Large chains only so far

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Emergence Evolution of the Mega Agencies

• Opportunity?
• Understand them and the opportunity
• Read the fine print
• Understand the variations
• Retail, Merchant, Opaque, packaging
• Use them selectively for incremental sales

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Struggle to Manage Electronic Channels

• To distribute through a spectrum of channels
• Evaluate relative merits
• Productivity, production, seasonality, fit

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Struggle to Manage Electronic Channels

• To maintain rate consistency
• Goal Accuracy, Integrity, Parity!
• To maintain data accuracy
• A proliferation of Extranets
• Some slow progress toward connectivity
• The average hotel attempts to maintain inventory
  in 7 electronic outlets
• Res managers say they can effectively manage 5

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Struggle to Manage Electronic Channels

• To understand the competition - rates,
  promotions, etc.
• Robotics options are emerging
• Hindered by lack of a single point of management,
  a dashboard
• but some promising developments

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Struggle to Manage Electronic Channels

• Opportunity?
• Review how you decide in which Web sites in which
  you will participate
• A manageable number?
• Check if your brand or representation company
  offers any competitive rate tools
• use them or get your own

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Revenue Management Comes of Age

• Revenue Management has been accepted
• But RM cannot be fully accomplished without
  technology
• RM technology is now accessible via Web now
  affordable

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Revenue Management Comes of Age

• Must extend beyond FITS to be successful
• to all market sectors
• beyond rooms revenue, to total spend
• Begins with rigorous, detailed forecasting
• Who is doing your occupancy forecasting?
• How granular is it? How accurate?
• Will move from focus on Revenue to one on Profit

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Revenue Management Comes of Age

• Opportunity?
• Watch for, and consider, emerging RM options
• Review your forecasting process
• Is it detailed?
• How good is the Occupancy History?
• Is Booking Pace considered?

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Packaging - Dynamic Otherwise

• Hot issue - lodging air and/or car
• Complex product supply issues
• Third party vendors WWTE, Neat Group
• Long term value yet to be proven
• but intriguing
• Need not be fully dynamic
• personalized package from limited menu

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Packaging - Dynamic Otherwise

• Opportunity?
• Investigate your brand or representation
  companys packaging options
• Use them when appropriate
• including as distressed inventory outlet
• Think about creative packaging

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New Competitors Gain Strength

• T/VO
• Not the machine Timeshare/Vacation Ownership
• A viable alternative to hotels, esp. for families
• Cruise
• 8.4 million America will cruise in 2004 (up .5
  million in 12 months)

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New Competitors Gain Strength

• Opportunity?
• Ask Why are they successful?
• T/VO Convenience
• Cruise Exotic, hassle-fee travel
• Emulate them

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Hotel Product Commoditization

• Trend has been to least offensive product
• Undermines perceived brand value
• Strengthens position of Megas as new brands of
  choice
• Successfully combated by personality
  properties W, Schrager, Kimpton, Joie de Vivre,
  Renaissance, Four Seasons
• Many independents are well positioned

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Hotel Product Commoditization

• Opportunity?
• Search for opportunities to differentiate your
  property from the crowd
• Ensure that difference is forcefully communicated
• including on the Web!

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New Faces Join Inventory Mgmt Distribution

• Res/Rev Manager
• Sales staff
• General Manager
• Owner
• (The Brand)
• Result Competing constituencies
• Result Sometimes inconsistent policies programs

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New Faces Join Inventory Mgmt Distribution

• Opportunity?
• Ensure you and your staff work as a team with a
  common, agreed goal

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The Bottom Line.

• Change!
• Challenge!
• Opportunity!

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Capitalizing on Electronic Distribution Trends

• Thank You!
• John Burns
• Hospitality Technology Consulting
• john_at_burns-htc.com