hotel
4 years ago
 

10 things hotel owners should do instead of whine about OTAs

NB: This is a viewpoint from Uwe Frers, CEO of Escapio.com, a Berlin-based OTA showcasing unique hotels. It first appeared on his travel industry blog in German and was translated for Tnooz by Holly Maguire.

Regardless of what I read, whom I speak to, or which trade conference I attend, there’s one topic among hoteliers that is more heatedly discussed than any other: how to increase direct online sales for hotels.

Lately, this discussion has focused on the emergence of alternative booking portals, the question of rate parity, and Google’s Hotel Finder.

It’s not merely talk. A recent article in Germany’s industry magazine AHGZ (“Hotels starting their own booking portals“, German only) describes individual hoteliers taking action and joining together to create alternative booking platforms, such as Mr. Hobs and Online im Hotel.

One hotel consultant, Gabriele Schulze, notes in her (German-language) blog that “whoever implements the most cost-effective distribution offers the best prices.” She’s encouraging a German industry-wide campaign that says “the best rates are always booked with the hotel or hotel brand directly – a promise which should always be kept.”

Misguided logic

The argument on switching to direct online sales is based solely on the commission level of the OTAs and the cheapest rates in the hotel. Differentiating the profit margins of the various distribution channels remains absent from the discussion.

In my opinion, the formula “profit = revenue – costs” focuses on the wrong parameters entirely, and I think basic math backs my argument up.

Trying to copy the solid online marketing and usability strategies of intermediaries can be difficult and expensive. Hotels should focus on other priorities that better play to their own skill sets.

hotel

As if metasearch will save them

Some hotel owners and consultants place mistaken hope in Google’s Hotel Finder and similar metasearch sites. They dream of the demise of HRS and Booking.com, thinking things would be better by booking with direct online sales via metasearch.

Hotel consultant Zarges von Freyberg writes (in German):

“For an overnight booking of 100 EUR, a hotelier pays HRS [a leading Germany-based OTA for hotels only] a commission of 15 EUR. Google charges 30 cents per click, making it more expensive only after the 51st user who does not book.

The conversion rate [number of bookers divided by visitors] should be around 2%. In our experience, hotels in rural areas have conversion rates from 8 to 10%, with city hotels aiming for up to 14%.”

Wait a second! Do hotels seriously have conversion rates of 8 to 14% on their own websites?! Name me one hotel with more than 1,000 website visitors a month and a conversion rate of 14%, and I’ll happily buy you a round of drinks at the next industry event!

The numbers don’t add up

As a number-crunching entrepreneur, I simply don’t understand the emotion in this discussion. From my perspective there’s a single issue: which distribution channel generates the highest profit margins?

To answer this question, I have to calculate personnel, resources, and external costs. I’ll try to explain by estimating costs, yet fictitious three star “Post Hotel”. I’m using estimates based on German averages for this type of property.

  • Number of rooms: 50
  • Ave. room rate incl. breakfast and 7% German VAT: 85 EUR
  • Ave. net room price excl. breakfast and VAT: 70 EUR
  • >Occupancy: 60%
  • Gross accommodation revenue per year: 930,750 EUR
  • Net accommodation revenue per year: 821,250 EUR
  • Online share: 40% or 328,500 EUR
  • Net revenue per year via booking portals (online travel agencies OTAs): 80% or 262,800 EUR
  • Net revenue per year on hotel own website: 20% or 65,000 EUR
  • Average commission to OTAs: 15%
  • Net online distribution costs through OTAs: 44,676 EUR

Should these net online distribution costs of 44,676 EUR be too high, “Post Hotel” must generate the OTA revenue (262,800 EUR) from elsewhere at lower cost.

If direct online sales are to solve all the problems, the hotel must be able to professionally deal with a plethora of issues including:

  • SEO (Search Engine Optimization): constructing a technically flawless website, creating and updating content, building up backlinks
  • Paid online marketing: activating search engine marketing (SEM), feeding price comparison sites, advertising in external newsletters, connecting with other marketing services (and we’ll leave out the Groupons of the world at this point)
  • Unpaid online marketing: Creating regular newsletters, hiring the email marketing technology, managing all relevant social media channels
  • Website: Keeping technical and content elements updated, generating and managing reviews
  • Booking engine: Integrating a state of the art booking engine, measuring, analyzing and optimizing conversions
  • Controlling: measuring, analyzing and optimizing parameters for every feeder channel on a daily basis (traffic, bounce rate, conversion, bookings, revenue per booking, cost per booking, revenue, costs, profit margin – to name but a few)

Replacing the third-parties costs money

So, who will be made responsible for all this? A specialist who can single-handedly take charge of the information technology, online marketing and optimizing conversion? An expert eye with enough experience is unlikely to cost less than the 44,676 EUR otherwise spent on OTA commissions annually.

Supposing this Digital Guru is out there somewhere, the hotel is unlikely to have a spare penny of the 44,676 EUR to pay for the above-mentioned marketing essentials after having employed him or her.

Another option would be outsourcing the entire project to an agency, by no means cheaper than an in-house solution.

Wishful thinking

To look at it from another perspective: I know of no booking portal calculating less than 10% marketing costs for bookings from price comparison sites or SEM.

So, taking the 15% commission from our calculation and deducting the marketing costs of 10% (two thirds of the 15%) leaves just 14,892 EUR for managing the website, booking engine, content and monitoring for the whole year.

In my example, above, that would work out to 1,241 EUR per month. That’s simply not enough to do the job as effectively and fill as many heads in beds as using the intermediaries to fill a portion–not all–but a portion of one’s rooms.

The current discussion on the pros and cons of direct online sales is essentially dependent the costs of the booking portals and OTAs.

Yet hoteliers should not be bogging themselves down with the costs and commissions of online distribution. Rather they should be critically questioning how each and every invested euro can generate a profit.

Critical observers would now retort with a range of examples of professional and successful hotel websites. They would tell me my perspective is too simplified, which could well be true.

To be fair, I give credit to every successful hotel website, and I encourage every hotel to take up the challenge of dealing with the online world.

But even so, I still ask myself if increasing direct online sales and taking on the associated tasks really should be the hotelier’s top priority.

10 things hotel owners should do instead of whine about OTAs

I believe hoteliers should focus 100% on what they excel at, rather than diving into the complex online world. Focus on their product, branding, quality, service and the guest, and how they can generate additional revenue there.

Following on from this, these would be my top ten priorities for hotels:

  1. Monitor the profit margins generated by each distribution channel (length of stay, revenue per order, food & beverage, retention, and cost), rather than just commission percentage
  2. Position your hotel on a range of different distribution channels, avoiding dependence on any one
  3. Market your hotel on additional niche websites that focus on specialist themes or particular target markets (may I make a plug for my site Escapio.com, here?
  4. Enhance the hotel’s individual charm. A strictly implemented concept and clear branding allow for higher prices than interchangeable competitor hotels nearby
  5. Generate higher revenue onsite through appropriate extra services and qualified personnel. Learn from airlines
  6. Stay in contact with your guests. Use newsletters, social media, postal mailings, giving them a reason to stay again. Use emotions, innovative content, qualitative offers (upgrade, extras) or quantitative discounts
  7. Use incentives to motivate guests in recommending your hotel to friends. Guests attract guests when they’re satisfied and rewarded for it
  8. Don’t let yourself be convinced about needing each and every new innovation. Twitter? Augmented reality? Pinterest? Quatsch. Ask yourself if these can really earn extra revenue or can contribute to another clearly defined goal
  9. Work on your own hotel website as just ONE marketing measure in your distribution strategy. But recognize and retain as partners at least the trustworthy and quality-oriented booking portals like Escapio
  10. Fair play for all distribution channels – keep your prices the same for all (comparable) booking channels

NB: This is a viewpoint from Uwe Frers, CEO of Escapio.com, a Berlin-based OTA showcasing unique hotels. It first appeared on his travel industry blog in German and was translated for Tnooz by Holly Maguire.
Image courtesy Flickr/Creative Commons user.

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Special Nodes

About the Writer :: Special Nodes

Special Nodes is the byline under which Tnooz publishes articles by guest authors from around the industry.

 

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  1. Martin

    OTAs are great, if hotel’s don’t want to work with them they should just quit the contract. Nobody forced them into the partnership. I think too many hoteliers are looking at the problem from the wrong end of the scope.
    The problem isn’t that OTAs are efficient, the problem is that their direct marketing is inefficient. The real guilty one here is the marketing agency or consultant. And if they don’t have any well look no further.
    OTA market share in a hotel is like a river, it takes the path of least resistance, if there is enough rooms to sell they’ll sell it, but if direct channels already sold them they wont.

     
  2. RustyM

    It’s easy to say, “leave the digital marketing to the experts.” However, where is the risk for the OTA? In this model; all of the risk of unsold rooms is with the hotel. Perhaps, if an OTA offered a guarantee of a block of rooms, I would consider not going direct.

     
    • Uwe Frers

      Thx for your comment, RustyM. If you like to get a guarantee of a block of rooms, you have to sell your inventory to tour operators like TUI or Thomas Cook. With 30+ % commission. A better decission?

       
      • RustyM

        Thanks. Not better, but great for the mix. Opaque priced components in a package is a great place to dump inventory without giving up revenue to the core Customers.

         
  3. Paul McNicoll

    A very interesting article and interesting comments from other readers. In my humble opinion I would agree with the author. OTA’s are only ‘bad news’ when they are selling rooms that you could have sold direct at the same or greater price organically.

    Put it another way; would you rather sell at a room at £100/100E/$100 with a 20% commission; or have it empty for the night? I know which one I would prefer every single time.

    So before you rush off and cancel all your OTA contracts you really have to understand “who is the customer they are delivering to you?” If they are selling you a new customer who was just browsing the locality for accommodation, you have stolen a customer who was potentially going to end up becoming your competitors customer – surely a win in anyone’s books? If, on the other hand, the OTA is bidding on your specific brand or property name; and your customer who was searching your property on a search engine ends up booking through the OTA website; then you need to consider taking action.

    OTA’s are a true example of where we forget the 80/20 rule of life – and focus on the 20% cost and ignore the 80% additional revenue.

     
    • Uwe Frers

      Thx Paul. I like your closing: “OTA’s are a true example of where we forget the 80/20 rule of life – and focus on the 20% cost and ignore the 80% additional revenue.”

       
    • John Pope

      Paul,

      If only Cost Benefit Analysis were so simple, as the example used by the author.

      Really? You’re saying that 20% of the cost, generates 80% of additional income – so you’re saying if OTAs didn’t exist, customers would have no other means to find the hotel, and therefore lose 100% of the 80% of additional revenue generated by OTAs for hotels. Sorry, I’m not convinced.

      In the real world, I’m sure you’re fully aware that the example used is an over-simplification to justify a distributors (OTAs) point of view. Not all hotels are created equal, and not all OTAs are, either.

      Some OTAs demand in excess of 25%, along with “Most Favored Nation” type status with last room availability, amongst other stringent terms and conditions, unless the hotel wants to fall to page 5 of OTA’s results pages, or worse. These conditions make it impossible to authentically manage yield. If OTAs really wanted to consider themselves “Partners”, they wouldn’t be demanding such conditions in their contract negotiations, nor leveraging their market reach to essentially extort most favorable conditions, no matter what market conditions dictate.

      You can see by the sentiment of non-industry, regular consumers on this recent article, that many customers would be appalled by the level of commission paid by hotels to some OTAs.

      http://www.theguardian.com/business/2013/aug/09/hotel-prices-oft-comparison-booking-expedia

      Pretty revealing stuff what the “man-on-the-street” thinks about the policies of many OTAs.

      The recent UK and German legal decisions on Rate Parity make it pretty clear that many policies utilised by some of the dominant OTAs are certainly not in the best interests of most hotels, and certainly hotel patrons. There is simply no denying that fact, whatsoever.

      Of course, your simple analogy holds some water, but if you were to poll 1,000 hotel OWNERS – not hotel representation companies – do you not think all 1,000 of them would like to reduce their acquisition costs?

      And, there’s no question that “MANY” – the dominant ones, with greatest market share – OTAs are a hotels highest cost channel, it only follows that the strategy for hoteliers would lean to investing in and focusing their resources on driving business through less expensive channels, especially their direct digital channel.

      I’m not going to go so far as suggesting that OTAs aren’t necessary – but let’s face it, presently, they’re really just a necessary “evil.” But, I suppose you’d only really hold that perspective, if it was your bottom line and personal well-being that was being affected.

      Sounds like a “10 Things OTAs Should Do Instead of Whine About Suppliers” article for Tnooz needs to be written.

       
      • Paul McNicoll

        I am not certain you paraphrased my thoughts entirely as I intented them.

        80% or 75% or 65% (or whatever is the hoteliers share) of a room rate is better than 100% of nothing – if the room was going to remain unsold that night. That is basic mathematics.

        If however you can sell ALL of your rooms without paying commission – of course you would choose to do so and dump your OTA’s. I don’t know many hotels that are in that position to do so.

        Therefore you require a balanced distribution strategy for your business, that maximises the profitability of every single room available in your property – not to be mistaken with – maximising the profitability of every room sold in your property.

        “Of course, your simple analogy holds some water, but if you were to poll 1,000 hotel OWNERS – not hotel representation companies – do you not think all 1,000 of them would like to reduce their acquisition costs?” – Clearly the answer to this question is yes. Nobody would say no, if they did, they are insane. But we are yet to see how reducing commission payments does this. The hotelier still needs to attract the customer to come direct; and that requires people and money – both of which are a cost – the very point the author is making.

         
        • John Pope

          Pretty sure I knew what you were saying, Paul. As highlighted by the following line:

          “and therefore lose 100% of the 80% of **ADDITIONAL** revenue generated by OTAs for hotels.”

          I also agreed that OTAs were currently necessity for many hoteliers, just an “evil” necessity – no obfuscation there.

          Additionally, I also agreed with the author that in some instances, it is prudent to utilise the services of some OTAs, but QUALIFIED it by saying that different strategies should be adopted by different hotels, depending on the specific characteristics and market conditions.

          The “one size fits all” approach that the author seemed to be advocating, seemed unwise to me. (Are you suggesting that it is wise, or a “panacea” that I referred to earlier, for hotels to adopt Uwe’s method, no matter who they are?)

          Similar to your assertion about the 80/20 rule – which typically relates to 80% of profit or revenue, is derived from 20% of customers – I didn’t find much merit in that approach, or outlook, if you’re a hotelier.

          Just disagreeing with your opinion on its merits, nothing personal.

           
          • John Pope

            Sorry, I should have said “Uwe’s conclusion” – not “method” – the method should be used, the conclusions on what strategies to employ, will always be unique.

             
  4. Urbano

    Thank you for your words John. It is nice to meet you again on a open conversation. Will contact you very soon.

    Thank you Uwe for your answer.
    Freeppie revenue model strategy is similar to social Network’s.

    You will get to know more very soon. Please take part to our user beta contest and do not forget to stay tuned on freeppie evolution till the launch @ Travel Innovation Summit.

    Thank you.

    Urbano

     
  5. Urbano

    Great Article!
    I totally agree with it. Hotels will learn quickly new ways to get higher revenues. OTAs won’t last forever. Especially since social networks are getting users closer to hotels.
    I would love to introduce a new concept we are working on. It’s a social travel network: freeppie
    (freeppie will be launched at the Travel Innovation Summit in Florida)

    This is how the Platform works: Travelers are rewarded for doing what they like the most: sharing their travel experiences. Being social, they accumulate credits through which are able to book discounted and FREE rooms and services. Operators are able to sell at NO commission and to regenerate their unstressed inventory into certified, genuine and viral social visibility.

    Freeppie introduces a revolutionary, more ethical and social way to book travels and tourist services.

    It is the first social travel network that REWARDS people for their social actions as they share their travel experiences with reviews, pictures and other contents with their social community.

    Furthermore Freeppie allows operators (hotels, restaurants, flights and tour companies, etc.) to sell with NO commissions and to use this margins and their unstressed inventory to increase their social visibility by offering discounts and free spaces to travellers who act like travel advisors in exchange of nominal and certified exposure. Freeppie guarantees a real possibility of genuine social visibility reviews are certified, finally nominal, viral and real. Operators have also the possibility to interact with users thanks to their social profile, where they can check reviews, pictures and comments, upload offers and share users opinions on their Facebook page.

    cool huh?

    u

     
    • John Pope

      Yep, very cool. I’m sold on Freeppie, already!

      The concept sounds great, but I’m mostly a fan because of the people behind it; they are some of the friendliest, genuinely passionate, and ambitious human beings you will ever meet in your life.

      They also happen to have been born, raised and thriving in the most beautiful, culturally inspiring and frequently visited places on Earth – Florence, Tuscany, Italy. “The home I was meant to have.”

      This team has tourism, professionalism and hospitality in their blood – along with plenty of the best Tuscan wines, money can’t buy. Happy memories…

      Congratulazioni e buona fortuna, Urbano, Luca e il resto della tua squadra.

      Si sta andando a fare grande! 😀

       
    • Uwe Frers

      Thx Urbano, interesting idea. If the booking is free of commission, could you explain your business model?

       
  6. Gus

    Hi,
    Dear Uwe,

    This is a good analysis however I think the point is that having a 50 bedrooms hotel is not ideal.

    Take a group controlling 3K rooms in the same city and averaging 90% occupancy (which is the case in many big European cities) and I think your math would be the best job ad for this SEM position!

    Also, in light of the recent changes (OFT and all) I get a night for free every 10 times I book on Hotels.com… We will see what happens to the billboard effect with this!

    Gus

     
  7. Charlie Osmond

    Hi Uwe,
    Thank you for the Triptease mention.

    As stated, there’s a time and resources challenge with digital marketing. There is also the challenge of creating content that is differentiated from OTAs. For these reasons we advocate having happy customers market your property for you.

    We think the future of reviews is going to be different in two ways:
    1. reviews will be visual – making them more emotive, engaging and impactful
    2. reviews will be hosted on or link directly to a hotel’s site – after all, if hotels follow your broader advice, their sites will not be bettered for information or price. Once a review convinces me ‘this is a place to stay’, why should I go anywhere but the hotel site?

    Charlie

     
    • Uwe Frers

      Thx Charlie for your comment. Unique content is essential for a successful transaction based website, agreed. Not shure how your system of generating reviews for hotels works. In Germany we can see a rise of review collectors for hotels where a hotelier can eliminate negative feedbacks in a very smart way. That’s why I prefer OTA generated reviews.

       
  8. Salanie

    Very interesting demonstration Uwe and a quite convincing one as well

    I however think you’re missing the main strength of an OTA for the hotel manager which is to bring him traffic. It’s no wonder that the hotel websites can reach 5+% conversion ratio: their traffic is very well qualified, given that most customers go through an OTA’s website first before going to the hotel’s.

    It is a total misunderstanding of customer behaviour to believe that most of them know exactly which hotel to go to for their holidays or business stay. The OTA gives the customer a clear vision of customer quality scores, price levels, comparable amenities.
    Hotel managers should evaluate the number of customers who come direct after going through an OTA, before deciding to simply shut it off.

     
    • Uwe Frers

      Totally agreed Salanie, thx for your comment. In case of Escapio I’m sure that for every booking we send to a hotel we deliver another one for free as a direct booking.

       
  9. John Pope

    Bravo, Señor Tortuga (nice handle, btw).

    Candor, with a touch of Stoic Philosophy wisdom is a solid combo – I like your style.

    I also appreciate your no-holes-barred recommendations – pragmatic, convicted and commercially sound. Why not “take your show on the road” to the Four Seasons, Alexis, Edgewater or Andra – surely they could use a good man like you, no? Or, perhaps spending time with the youth of the world is more satisfying – been there myself in a past life.

    Best advice of all – “Write your mother a nice letter.” No better, or more relevant, words have ever been heard, by this less-than-humble listener.

    Kudos.

     
  10. Mr Tortuga

    Hmm,

    So this “article” is little more than the self serving obfuscation of facts. No one is looking for another middle man to pay. The customers are looking for a nice place to sleep and hang out. They are looking for us. Like any business, we all know we have to advertise, but this is just another ad agency who takes our good will and our availability and our pictures and uses them to get in between us and our customers. The author self servingly suggests that we leave the “difficult” task of online marketing to them. Hogwash !

    I would however agree that whining although satisfying has no place in effective marketing and managing of a lodging facility. I also agree with most of the suggestions, but particularly in a smaller market, I would prioritise them much differently.

    #1 Make your own web site as good and as well positioned as you can afford.
    #2 Do as much as you can to make your place the best place for people to sleep and hang out.
    #3 Talk and listen to your customers. (as she said, put good energy into staying in touch with your customers) Find creative ways to give them big smiles, and encourage them to pass on the smiles and tell their friends about your place.
    #4 Listen to online criticism – there is often some little truth that can help you improve your service.
    #5 No need to “play fair” with these (OTA) re-sellers as they have no loyalty to your business. They will gladly sell a bait and switch “no-tell” motel just as easily as they will sell your place. Make sure your PMS is powerful enough to only give them availability when you don’t think you will sell it on your own site or with phone reservations, and walk ins. Whenever possible offer your best price on your own web site. Do not give them the best discounts. Do spread your availability wide and thin as long as they aren’t technologically useless or frequently cause overbooking problems. The more re-sellers there are in a market, the less likely they are to ask for a higher commission.
    #6 Set goals and head in the direction of achieving those goals. Remember why you got into the business. Maybe you wanted to coast ? (then set up a way to coast) Maybe you like helping people out. (Find good ways to help people out) Maybe you want to start a big chain. (Go for it ! )
    Do good work. Write your mother a nice letter.Have a fine old day.

     
    • Uwe Frers

      Mr. Tortuga, thx for your comment.

      I disagree with your opinion “No one is looking for another middle man to pay. ” It’s a question of which part of the business a hotelier can manage and which one he is not able to do. An example? Have a look on the German version of your website http://greentortoise.net/index_german.html. One sentence, 10 mistakes. I’m shure that an OTA will do a better job for your international business.

       
  11. Happy Hotelier

    Well said Uwe,

    I just try to do just all that as a one (err 2 with my wife) person operation with a 3 suites hotel.

    In this I’m helped with a Dutch hotel association backed website hoteliers.com which works on a fixed fee basis rather than a commission model and which I mention here as a pointer for John Pope who seems busy with reinventing the wheel 😉

    As a beside: Where can I find Holly Maguire’s web presence?

     
    • John Pope

      Thanks very much for the pointer, Guido. You are a wise man, indeed.

      I take it you reckon it’s futile trying to make the wheel roll a little (or lot) smoother? Or should we all just accept that the wheel is as round and perfect as it’s ever going to be in hotel, and wider travel, distribution?

      For me, innovation and the pursuit to create what most would consider to be the impossible should be a perpetual human pursuit – a pursuit of greater excellence, or “A Better World” so to speak. I happen to think that the status quo is just a problem waiting to be solved – or opportunity to prove everybody wrong. What do you think?

      Obviously, only iconoclastic fools like Einstein, Tesla, DaVinci, Musk or Jobs would ever be stupid enough to follow such a path.

      As Nelson Mandela said, “It always seems impossible until it’s done.”

      I’d highly recommend you read this post that was recently sent to me, written by well known Futurist Thomas Frey – author of “Communicating With the Future” and Executive Director of the DaVinci Institute – on developing an education system that puts to bed conventional wisdom and long held convictions and beliefs, but again, reinvents that less-than-optimal wheel, as well Guido.

      http://www.impactlab.net/2013/07/28/preparing-our-minds-for-thoughts-unthinkable-the-future-of-colleges-and-universities/

      It was recommended by a friend and colleague – one who I’m certain you have tremendous respect for, by the way. Just so you don’t think it originates from a fool like me.

      Enjoy. It’s a real eye opener! And, it has similar sentiment, ideals and precepts that could also be applied to the industry you and I love so much.

      I’d assert, an industry that has plenty of room for dramatic innovation and disruption.

      As an aside, did you hear about the story during the London Olympics where the French Cycling Team complained that the British Cycling Team had produced a wheel that was “more round” than the wheels used by every other national team?

      That was funny… I wonder if there was any truth to that, though? 😉

      Happy Saturday, Happy Hotelier. 😀

       
      • Happy Hotelier

        Uhm I looked up the link of your comment which is a linked in profile.
        Outstanding keyword: “Dreamer” – which is good.
        Second impression: Jack of all trades – also good.
        Third impression: A Golfer – hm must be able to concentrate and keep his eyes on the ball.

        Hence my tongue in cheek observation. Not so much an opinion.

        But success with the endeavor!

         
        • Kevin May

          Kevin May

          @HH – ;)))))

           
        • John Pope

          Oh Happy, sounds like you might have got up on the wrong side of the bed this morning. 🙁

          You must have clicked on the wrong link – if, in fact, you wanted to read the Thomas Frey article I suggested (compliments of Señor Rock Cheetah – if that makes you even more Happy). 😉 Try it, again – it’s the one in the body of my comment, NOT the link to my name (and LI profile).

          But, I have to admit, I’m blushing that you’d actually take the time to check me out – and all the way to the bottom of the page, too. Nice.

          And, one final word to the wise…

          “Your ‘dream’ is not a dream unless people start laughing at it.” Saad Vakil

          Cc: KM ;-))))))) That quote’s for you, too.

          An even Happier Sunday, all.

           
  12. Patrick

    This is only relevant to hotels that fall within the parameters you described. Higher commission rates, hotel chain group buying, destination competition levels, and various anomalies abound in the market making your assumptions just that, assumptions. I agree with the previous commenter, this should be taken with a grain of salt, and each hotel should analyse their own position. It’s a perilous position to hand over the growing digital direct channel to aggressive 3rd parties especially as digital marketing technologies become more efficient, effective, and easy to implement.

     
    • Uwe Frers

      Thx for your thoughts, Patrick. Agreed, my example is just an assumption. And the number crunching example is only relevant to hotels that fall within the parameters I described. But my advice to focus on product and to measure not costs but profits per marketing channel could be relevant to a bigger number of hotels.

       
  13. John Pope

    Good article, Uwe (Holly).

    Much of what is described here is sound advice (albeit, taken with a grain of salt from a distributor’s perspective).

    I would also agree that every hotelier is far better served by focusing their time, energy and limited resources on delivering the best service or product possible, rather than trying to become world class digital marketers – it’s highly unlikely that they (hoteliers) will win that battle, in today’s rapidly, and constantly, changing digital world.

    However, I’d also question the “hypothetical” metrics and analysis of a 50 room/€75-€60 per night/60% occupancy as a typical hotel, and the subsequent recommendations as being a panacea for ALL hoteliers. It is always going to be different horses for courses.

    For instance, if a hotel has many more rooms, higher average daily rates and better occupancy levels, then Uwe’s argument quickly doesn’t hold up under the same scrutiny. Especially for many of the types of hotels that are curated for sites like Escapio, Mr. & Mrs. Smith, and some of the other more discerning hotel websites and distribution brands.

    For most, if not every, 4 and five star city hotels – and many higher-service resort hotels – it certainly does make sense to invest more heavily in attempting to drive more direct sales, or some other strategy to reduce the cost of sale.

    But, Uwe’s certainly right that the “Digital Guru” type digital-genius that he described, and would be necessary to effectively achieve those kinds of superior marketing results are about common as unicorns and leprechauns.

    If you’re fortunate enough to have one, do everything you need to do to keep them as happy as Hugh Hefner on his 70th birthday; if you would like one I suggest doing at least 50 “Hail Mary’s” on the hour, every hour; if you need one, please just revert back to Uwe’s original advice and focus on producing a better product, and the rest will take care of itself – because, no matter if you have the digital-prodigy-type love child of Mark Zuckerberg and Larry Page will even the best digital marketer make a bit of difference to your bottom line.

    Ultimately, every decision on how to prioritise one’s resources will depend on the specific market conditions and characteristics of each hotel.

    Although the process and analysis Uwe described should be done by every hotelier, the outcomes and recommendations will be very individual, in nature.

    In the interest of full disclosure, I’m also about to become a third party distributor of hotel content, too. But, we’re going to present a model to the industry that satisfies the needs of all stakeholders, far better than the models that exist in the market today.

    Promise… 😀

     
  14. daniel

    Yes please stop the whining and start managing!

     
  15. Kevin Mitchell

    Excellent analysis!

     
 
 

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