smokin
663 days ago
 

Hotels: What are some of you guys smoking?

I just have to get this of my chest, and share my latest experiences with you.

I love it how many hoteliers complain about the fact that online travel agencies are penetrating their hotel too far and are almost controlling their businesses.

And not to forget the rants we hear about the average room rate being too low. But sometimes we have to look at ourselves instead of blaming others.

Some hotels just have to get their revenue management strategy in order, more than anything else.

Pass the light

A perfect example is what happened to me this week when reserving a hotel in Bandung, a large university and retail outlet city in Indonesia.

I called a hotel listed in the first page of TripAdvisor to find out what its rates were running at. I was quoted Rupiah 1,200,000 (about $120).

I decided to look around a bit more knowing I should be able to get a better deal in this market. When I looked on the hotel website and saw rooms available at Rupiah 800,000. I decided to call the hotel back.

At the same time I was looking on HotelsCombined, the metasearch engine, to check its rates on the OTAs from which it gets rates.

I saw on Agoda, a leading Asia OTA, the same hotel at Rupiah 600,000. I told the reservations agent I would book the hotel and they could save their commission if they would let me book directly.

Still, over the phone the best rate the hotel me would give me was Rupiah 1,000,000. If I want to have a better price, I was advised to book on the website or on Agoda.

What is wrong with the management in this hotel? Giving a better price through a third party channel?

They would rather pay commission than take my reservation directly. I am sorry, but this property simply deserves to go down in its own mismanagement.

All rights to complain had been evoked when I meet with the owners this week.

Definitely inhaling

But really come on? What are these guys on? They must be smoking some serious stuff, watching re-runs of Cheech and Chong movies all day long.

Another tale was shared to me recently by a friend working for a regional Asian hotel chain. The company has implemented several packages on its own hotel website, as well as OTAs and other distributors.

Now he is faced with the challenge of some of the general managers not understanding the need for dynamic package rates linked to the best available rate (BAR).

The GMs think it so much easier to have a flat package rate. It’s just simple to load such rates in to the PMS and to advertise.

They unfortunately overlook the overall objective, which is maximizing revenues. Because what would happen if the package rate is US$99 and the BAR is US$150 (and they don’t close the package)?

Yes, you have guessed correctly: everyone would book the package and no-one would buy the BAR. The hotel would be losing out on its revenue potential.

It seems that the issue is that too many hoteliers are hospitality people and do not have enough technical and business insight to manage their systems and strategies. It is time that the old-school hotelier either gets trained or is assigned only to operations.

Don’t have the legacy challenges of the relic hotelier harm your hotel business. It’s a business that needs to make money, or rather profit.

Ban the bong!

 
 
Patrick Landman

About the Writer :: Patrick Landman

Patrick Landman is a contributing Node to Tnooz and founder and CEO of Xotels. This hotel management group assists independent hotels with revenue management, online marketing and internet distribution strategies.

They offer outsourcing services, coaching, consulting and training. In his blog, Patrick challenges hoteliers to think out of the box and not to accept the established order.

Through a passionate drive for growth and improvement he brings creative tips, ideas and best practices to the table that can help hotels drive up their bottom line.

In previous roles he has helped to develop businesses like RateTiger and Hotels.com into industry leaders. 

 

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  1. Mike Thiel

    Is the writer’s first language English? In addition to the already-mentioned typos, the grammar is awful. However, speaking to the point of the article, the author seems to be arguing for a somewhat anarchistic setting of prices (i.e. at the front desk, in response to whatever a caller may propose). And, who says that the hotel and the OTAs are even offering the same room category, view, etc. at the quoted prices. A third floor room is very different from one on the 13th floor when surrounded by six storey buildings.

     
    • Merrianne

      Actually, Mike, they are not offering “a room type” at all. They can’t even guarantee smoking preference. That is where you toss the dice when booking through an OTA.

      HOWEVER, IF you have a future guest on the phone, WITH a verifiable rate from an OTA, WITH availability of a “non-type” room in the inventory allotted the OTA, AND you have ANY room in your hotel available….then WHY let the OTA make the money? Heck, book the Presidential Suite! Then upgrade one of your regular guests, and dump the now-non-OTA booking in a lesser room.

      In my experience, OTA room allotments are based on anticipated occupancy. You don’t give them the keys to the kingdom when RACK is maxed. Sure, your accounting department is going to have a cow, because it’ll bring down your average nightly rate. Actually doesn’t look that great for the FOM, either.

      But PROFIT is the name of the game, and your hotel is up and running anyway, so EVERY OCCUPIED ROOM INCREASES PROFIT! (Unless, of course, your OTA rate is under cost. But if they book through the OTA, then it’s just THAT MUCH FURTHER UNDER COST.) If you don’t book the room at the OTA price, then you are just playing a game of corporate CYA, cookin’ the books without considering profit.

      You’re not an accounting type, are you?

      Oh, in reference to the grammar, the writer is allowed a LOT of LEEWAY when the article is tongue in cheek. Get a sense of humor!

       
    • Patrick Landman

      Patrick - Xotels

      My deepest apologies if my Dinglish (dutch english) is not up to the highest of standards of everyone :) .

      Let’s focus on the point I am making however. Regardless if it is the same room type or not, or if it on a higher or lower floor, facing the beautiful garden or the road in front of the hotel, it simply does not make sense to offer better rates to OTA than you are willing to sell at the hotel directly.

      Remember Pavlov and his conditioning expiriments with dogs? We as hoteliers are doing the same thing with consumers. We are telling them not to book us directly, but prefer reservations through OTA.

      With meta-search engines like Trivago, Kayak, HotelsCombined, Bing Travel and Google Hotel Finder the pricing of a hotel has become increasingly transparent. And consumers have become smarter and well educated.

      Make sure you have a coherent pricing and availability strategy … make sure you are set-up to make Profit, and don’t erode your hotel from within loosing the direct business which is already so hard to get!

       
  2. Merrianne

    I started working hotel front desks about 15 years ago, and was always amazed at the astoundingly low relative price of the OTA rates. As FOM, I was not allowed to match the rates. Of course, with time the GM was canned, the DOS left the chain, the chain failed. Another, larger chain now runs the property, and, I am sure, has the same rules.

    Now, I book travel by checking the OTA then checking the service provider website. If the OTA rate is lower, I book with them. Don’t waste my time, the chains just aren’t smart enough to take whatever revenue they can get.

    Thankfully, I now work for a Mom & Pop vacation home management and rental company, in a local market. Sanity finally rules!

     
  3. Duncan

    Seeing a rate which I have felt a little pricey for a particular hotel, I have on occasion then contacted the hotel directly to attempt to negotiate the OTA advertised rate if I book direct – on the premise that they would still make more money than if they’d paid the whole third party’s commission as I wasn’t suggesting they reduce it by the entire commission %.

    Net result of this? Few hotels engage with it, which surprises me given the opportunity to gain a direct booking and directly delight a customer….

     
    • Tony

      Ditto to that Duncan.

      I’ve given up on that approach entirely now and just book the obvious loss making (for the hotel) Travelzoo/Living Social etc deal and then call the hotel up and see what the chances of a high floor/late check out might be. Success rate on that is hovering around 100% because the front desk are empowered to make those decisions around customer service but not around making the hotel more money by securing every direct sale they can. Crazy……

      I’m not a hotelier but what is the worst that can happen if you give the front desk a basement price they can’t go under and get them to secure every direct sale they can? Perhaps pay bonuses on the the best average price performer above the basement price over a certain sales volume in the team, to ensure the negotiation on behalf of the hotel is also considered. The work might become fun.

       
  4. Manuel Gomes

    OTAs on a merchant model (buying room-nights in bulk at special rates, then re-selling them) can sell their allotment at lower prices than the hotel is willing to practice for rooms they’re fairly certain they can sell at a higher rate.

    Of course, if it’s distressed inventory, it may be just not wanting to go “down market” or… well, the thesis of this article :)

     
  5. Maddy @ I'm Not Home

    The logic (or lack thereof) is astounding. Perhaps though, there’s more to it than meets the eye? Deals between hotels and agents or some other sort of exchange?

     
  6. Michael

    What about a rant on proof-reading? Average is spelt with an ‘e’.

     
    • Kevin May

      Kevin May

      @michael – oopsie, well done – you spotted today’s deliberate mistake.

      :)

      FIXED.

       
      • hiren

        What about:

        “What are thes guys on?” — another missed e?

         
        • Kevin May

          Kevin May

          @hiren – oh my goodness…

          missing “e’s”… too many drugs references in this article, clearly. :)

           
 
 

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